A company sold merchandise with a cost of $238 for $440 on account.The seller uses the perpetual inventory system.The entry to record the cost of merchandise sold would include ________.
A)a debit to Sales Revenue and a credit to Cash for $440
B)a debit to Cash and a credit to Sales Revenue for $440
C)a debit to Cost of Goods Sold and a credit to Merchandise Inventory for $238
D)a debit to Merchandise Inventory for $238 and a credit to Cost of Goods Sold for $238

Question

Quizplus · Accepted Answer

To record the cost of merchandise sold, we need to debit the Cost of Goods Sold account (which represents the cost of the merchandise sold) and credit the Merchandise Inventory account (which represents the cost of the merchandise we still have on hand). The amount to be debited is the cost of the merchandise sold, which is $238 in this case. Therefore, the correct entry is a debit to Cost of Goods Sold and a credit to Merchandise Inventory for $238.

A Company Sold Merchandise with a Cost of $238 for $440