When inventory is sold, a merchant records a debit to:

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Quizplus · Accepted Answer

When inventory is sold, the cost of the goods and related expenses are recognized as Cost of Goods Sold (COGS). Therefore, the merchant would record a debit to COGS and a credit to Sales. This reflects the transfer of inventory from an asset account (Merchandise Inventory) to an expense account (COGS).  Selling expenses are not directly related to the sale of inventory and would not be recorded with a sale of inventory.

When Inventory Is Sold, a Merchant Records a Debit To