Campagna Company uses the periodic inventory method.On January 5,Campagna sold merchandise to Kolb Inc.for $1,000 under credit terms of 2/10,n/30,FOB destination.The merchandise had cost $750.How would the company record this transaction?
A)Debit Accounts Receivable for $1,000,credit Sales for $1,000,debit Cost of Goods Sold for $750,and credit Merchandise Inventory for $750.
B)Debit Cash for $1,000,credit Sales for $1,000,debit Cost of Goods Sold for $750,and credit Merchandise Inventory for $750.
C)Debit Accounts Receivable for $1,000 and credit Sales for $1,000.
D)Debit Accounts Receivable for $1,000,debit Cost of Goods Sold for $750,and credit Gross Margin for $750.
E)Debit Accounts Receivable for $980,credit Sales for $980,debit Cost of Goods Sold for $750,and credit Merchandise Inventory for $750.

Question

Quizplus · Accepted Answer

In a periodic inventory system, the cost of goods sold is not recorded at the time of sale. The entry records the sale on credit by debiting Accounts Receivable and crediting Sales.

Campagna Company Uses the Periodic Inventory Method