A company that uses the perpetual inventory system sold goods to a customer for cash for $4,200.The cost of the goods sold was $1,000.Which of the following journal entries correctly records this transaction?

Question

Quizplus · Accepted Answer

The journal entry to record the sale of goods under perpetual inventory system is:
Debit: Cash/Bank account (selling price)
Credit: Sales account (selling price)
Debit: Cost of Goods Sold account (cost price)
Credit: Inventory account (cost price)
Therefore, the correct journal entry is:
Debit: Cash account $4,200
Credit: Sales account $4,200
Debit: Cost of Goods Sold account $1,000
Credit: Inventory account $1,000
Option B correctly records this transaction. Option A debits the inventory account instead of cost of goods sold account. Option C debits sales account instead of the cash account. Option D debits too much amount to the cost of goods sold account.

A Company That Uses the Perpetual Inventory System Sold Goods