BetterBuy sells a computer from inventory for $599 on credit.BetterBuy originally bought the computer from IBM for $395.What are the journal entries Betterbuy would record?
A)Debit Cash for $599,credit Sales for $599; debit Inventory for $395 and credit Cost of Goods Sold for $395.
B)Debit Accounts Receivable for $599,credit Inventory for $395,and credit Retained Earnings for $204.
C)Debit Accounts Receivable for $599,credit Sales for $599; debit Cost of Goods Sold for $395 and credit Inventory for $395.
D)Debit Inventory for $395,debit Cost of Goods Sold for $204,and credit Accounts Receivable for $599.

Question

Quizplus · Accepted Answer

- Debit Accounts Receivable for $599: This represents the amount owed to BetterBuy by the customer who purchased the computer on credit.
- Credit Sales for $599: This represents the revenue earned by BetterBuy from the sale of the computer.
- Debit Cost of Goods Sold for $395: This represents the cost of the computer sold, which reduces BetterBuy's gross profit.
- Credit Inventory for $395: This reduces the value of BetterBuy's inventory because one computer has been sold.

BetterBuy Sells a Computer from Inventory for $599 on Credit