On June 1, Electronics Distribution ships 100 TVs to TV World on consignment. The cost of each unit is $600 and the unit selling price is $750. At the end of June, TV World sold 50 units. How much cost of sales should be recorded by Electronics Distribution for the month of June?
A)$37,500
B)$30,000
C)$60,000
D)$75,000

Question

Quizplus · Accepted Answer

Since the TVs were sent on consignment, Electronics Distribution still owns the inventory until it is sold by TV World. Therefore, Electronics Distribution should not record any cost of sales until the TVs are sold by TV World. The cost of sales for the 50 units sold by TV World would be $30,000 (50 units x $600 cost per unit).

On June 1, Electronics Distribution Ships 100 TVs to TV