MNO Ltd sells goods on credit for $100 000 (cost price $60 000).Which of the following is the correct journal entry to record this transaction?

Question

Quizplus · Accepted Answer

The correct journal entry to record this transaction would be to debit Accounts Receivable for $100,000, debit Cost of Goods Sold for $60,000, credit Inventory for $60,000, and credit Sales Revenue for $100,000. This reflects the fact that MNO Ltd made a sale on credit, recognizing the cost of the goods sold and the corresponding revenue. Option B is the only choice that includes both the debit to Accounts Receivable and the debit to Cost of Goods Sold, as well as the credit to Inventory. Option A only includes the credit to Sales Revenue, while Option C includes a credit to COGS and a credit to Sales Revenue but no debit to Cost of Goods Sold. Option D includes the correct debits to COGS and Inventory, but is missing the crucial debit to Accounts Receivable.

MNO Ltd Sells Goods on Credit for $100 000 (Cost