Embark produces mulch for landscaping use. The following information summarizes production operations and sales activities for June. The journal entry to record June sales is:
A) Debit Accounts Receivable $810,000; credit Cost of Goods Sold $810,000.
B) Debit Accounts Receivable $810,000; credit Sales $366,000; credit Finished Goods Inventory $444,000.
C) Debit Cost of Goods Sold $444,000; credit Sales $444,000.
D) Debit Finished Goods Inventory $444,000; debit Sales $810,000; credit Accounts Receivable $810,000; credit Cost of Goods Sold $444,000.
E) Debit Accounts Receivable $810,000; credit Sales $810,000; debit Cost of Goods Sold $444,000; credit Finished Goods Inventory $444,000.

Question

Quizplus · Accepted Answer

The correct journal entry to record sales involves debiting Accounts Receivable for the sales amount ($810,000) to record the amount owed by customers, crediting Sales for the same amount to record the revenue earned, debiting Cost of Goods Sold for the cost of the goods sold ($444,000) to record the expense related to the sale, and crediting Finished Goods Inventory for the same amount to remove the cost of the goods sold from inventory.

Embark Produces Mulch for Landscaping Use