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20 July, 20:22

A firm just made a $1,000,000.00 sale to a retail chain. The firm will be 50.00% in cash today, and then pay the remainder in 30 days (a receivable for the firm). The firm fills the sale with $400,000.00 in inventory. Consider how an accountant will handle this transaction.

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  1. 20 July, 20:50
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    Record #1

    Cash $500,000.00

    Accounts Receivables $500,000.00

    Sale $1,000,000.00

    Record #2

    Cost of Goods $1,000,000.00

    Inventory $400,000.00

    Gain on sales $600,000.00

    Explanation:

    The firm has a Gain on sales for $600,000.00 because of their inventory cost $400,000.00 but they sold it by $1,000,000.00
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