A company purchased inventory for $800 per unit. The inventory was marked up to sell for $1,000 per unit. The entries to record the sale for cash and the cost of a unit of inventory would include debits to which of the following accounts?

Question

Quizplus · Accepted Answer

The sale for cash would result in a debit to Cash and a credit to Sales for $1,000 per unit. The cost of a unit of inventory would result in a debit to Cost of Goods Sold for $800 per unit and a credit to Inventory for $800 per unit. Therefore, the correct entries would be Cash (debit) $1,000, Sales (credit) $1,000, Cost of Goods Sold (debit) $800, and Inventory (credit) $800. Option B is the only choice that reflects these entries.

A Company Purchased Inventory for $800 Per Unit