Question

On May 1, Shilling Company sold merchandise in the amount of $5,800 to Anders, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Shilling uses the perpetual inventory system and the gross method. The journal entry or entries that Shilling will make on May 1 is (are):

Answer 1

Answer:

The journal entry that is to be recorded on May 1 is shown below:

Explanation:

May 1

The first entry to be posted:

Accounts Receivable A/c...................Dr     $5,800

       Sales A/c............................................Cr      $5,800

As the company made a sale, so the sale is credited and it made against the accounts receivable. Therefore, accounts receivable account is credited.

The second entry to be posted is as:

Costs of goods sold A/c....................Dr   $4,000

       Merchandise inventory A/c...................Cr   $4,000

The cost of the goods sold amounts to $4,000. So, the account of COGS is debited and it is against the inventory. Therefore, the merchandise inventory is credited.