Answer:
The sale entry would be:
Dr Trade Receivable $ 600,000
Cr Sale $600,000
And the inventory sent out of warehouse to customer would be recorded as:
Dr Cost of goods sold $360,000
Cr Finished Goods account $360,000
Explanation:
As we know the sale is credit in nature and inventory sold on credit increases the trade receivable which is debit in nature.
So the entry would be:
Dr Trade Receivable $ 600,000
Cr Sale $600,000
And the inventory sent out of warehouse to customer would be recorded as:
The reason is that once the product is sold then the cost of finished goods is eliminated from the inventory account and would be charged to the cost of goods sold. So the entry would be posted by the cost of equivalent that the company has incurred to manufacture the product. Here the cost of equivalent is given and is $6 per unit.
So for the sale of 60,000 units the total cost of equivalent will be:
Total equivalent cost = 60,000 units * $6 per unit = $360,000
And the entry would be:
Dr Cost of goods sold $360,000
Cr Finished Goods account $360,000
