A company sold merchandise with a cost of $207 for $370 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 $370
B)a debit to Cash and a credit to Sales Revenue for $370
C)a debit to Cost of Goods Sold and a credit to Merchandise Inventory for $207
D)a debit to Merchandise Inventory for $207 and a credit to Cost of Goods Sold for $207

Question

Quizplus · Accepted Answer

The entry to record the cost of merchandise sold would include a debit to Cost of Goods Sold and a credit to Merchandise Inventory for $207, as the cost of goods sold is an expense and the merchandise inventory is a contra account to the inventory account. Choice A and B are incorrect because they do not record the cost of goods sold. Choice D is incorrect because it debits the inventory account instead of the expense account.

A Company Sold Merchandise with a Cost of $207 for $370