Answer:
Debit - Cost of Goods Sold
Credit - Finished Goods Inventory
Debit - Accounts Receivable
Credit - Sales(revenue)
Explanation:
The accounts involved here are:
1. Accounts Receivable
2. Sales or revenue
3. Cost of sales
4. Finished goods inventory.
Firstly, manufactured goods at a cost of $850;
Debit - Cost of Goods Sold
Credit - Finished Goods Inventory
Here, finished goods inventory which is a current asset has been sold and reduced and income or sales or revenue increased. And remember, credit decreases asset
For the sales on credit to Percy corporation for $1,175;
Debit - Accounts Receivable
Credit - Sales(revenue)
Here, debit increases the accounts receivable and credit increases sales.
