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23 February, 00:34

Faust Company uses the perpetual inventory method. Faust sold goods that cost $6,600 for $11,200. If the sale was made on account, the net effect of the sale will:

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  1. 23 February, 00:58
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    Increase in total assets by $4,600

    Explanation:

    Faust sold goods that cost $6,600 for $11,200

    Cost of goods sold A/c Dr. $4,600

    To inventory $4,600

    Account receivable A/c Dr. $11,200

    To sales $11,200

    (sale was made on account)

    Net effect:

    = $11,200 - $6,600

    = $4,600

    Therefore, there is an increase in total assets by $4,600.
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