The required entries are as follows:
Dr. Cost of goods sold $770
Cr. Inventory $770
Dr. Accounts receivable $1,260
Cr. Sales revenue $1,260
What entries are required for sale of merchandise?
When merchandise is sold, the company's inventory reduces and cost of goods sold increases ,hence, the appropriate entries are to debit cost of goods sold in the income statement and credit the inventory account in the balance sheet.
Also, to account for sale on account, which means credit sales, the revenue account is credited with the sales value whereas the account receivables which represents claim from the customer is debited, this would happen for every transaction because the inventory system is perpetual.
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Answer:
The correct statements about credit sales are:
- Accounts receivable arise from credit sales
- Accounts receivable should be reported at net realizable value.
- Revenue is reported when the company fulfills its promise to transfer control of a good or service to a customer
Answer: Option D
Explanation: In simple words, business services refers to the activities that supports the business but do not provide any kind of tangible commodity from them.
Accounting, marketing, insurance and education are some of the many examples of business services.
From the above we can conclude that the correct option is D.
