Adelaide sold goods to Perth on credit at a price of $4400 including GST. What is the entry to record this transaction in Adelaide's books under either the perpetual or periodic inventory system? (Ignore the transfer to COS required under the perpetual system.)

Question

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In this transaction, Adelaide sells goods on credit, including GST. The total amount including GST is $4400. The correct entry involves debiting accounts receivable for the total amount including GST ($4400) and crediting sales for the amount excluding GST ($4000, assuming a 10% GST rate), with the difference ($400) credited to GST collections. This reflects the revenue earned from the sale and the GST collected on behalf of the government.

Adelaide Sold Goods to Perth on Credit at a Price