X-Mart uses the perpetual inventory system to account for its merchandise. On June 1, it sold $7,000 of merchandise for cash. The original cost of the merchandise to X-Mart was $500. Demonstrate the required journal entry to record the cost of the sale by selecting all of the correct actions below. (Check all that apply.) Credit Cost of Goods Sold $500. Debit Merchandise Inventory $500. Debit Cost of Goods Sold $500. Credit Merchandise Inventory $500.

Question

Fabian

Business

18 September, 02:44

X-Mart uses the perpetual inventory system to account for its merchandise. On June 1, it sold $7,000 of merchandise for cash. The original cost of the merchandise to X-Mart was $500. Demonstrate the required journal entry to record the cost of the sale by selecting all of the correct actions below. (Check all that apply.) Credit Cost of Goods Sold $500. Debit Merchandise Inventory $500. Debit Cost of Goods Sold $500. Credit Merchandise Inventory $500.

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Damari Marsh · Answer 1

Debit Cost of Goods Sold $500

Explanation:

When inventory is purchased, debit inventory and credit cash or accounts payable. When inventory is sold, credit inventory (with the cost of inventory sold) and debit cost of goods sold (p/l).

Further more, sales is recognized by crediting sales account and debiting cash or accounts receivables.

As such, if original cost of the merchandise to X-Mart was $500, entries required would include a credit to merchandise inventory $500 and Debit Cost of Goods Sold $500.