Question

Landon Jewelers uses the perpetual inventory system. On April​ 2, Landon sold merchandise with a cost of $ 3 comma 500 for $ 7 comma 000 to a customer on account with terms of 1​/15, ​n/30. The journal entry to record the cost of goods sold would​ be:
A. Merchandise Inventory - 2,500, Cost of Goods Sold - 2,500

B. Cost of Goods - 2,500, Accounts Receivable - 2,500

C. Cost of Goods Sold - 2,500, Merchandise Inventory - 2,500

D. Sales Revenue - 2,500, Cost of Goods Sold - 2,500

Answer 1

Answer:

C. Cost of Goods Sold - 2,500, Merchandise Inventory - 2,500

Explanation:

The journal entry would be:

Account                           Debit             Credit

Cost of Goods Sold        $2,500

Merchandise Inventory                         $2,500

When a cost increases, it is debited, and when an asset, such as inventory, decreases, it is credited.