Materials Handling Company sold merchandise inventory costing $7,000 for $12,000 in cash.How should Materials Handling Company record this transaction?

Question

Quizplus · Accepted Answer

The correct recording of the transaction involves debiting Cash for the amount received ($12,000), debiting Cost of Goods Sold for the cost of the merchandise sold ($7,000), crediting Sales for the sales amount ($12,000), and crediting Merchandise Inventory for the cost of the merchandise sold ($7,000). This accurately reflects the increase in cash, the expense of goods sold, the revenue from sales, and the decrease in inventory.

Materials Handling Company Sold Merchandise Inventory Costing $7,000 for $12,000