Question

on may 1 shilling company sold merchandise in the amount of $5,800 to anderson, with credit terms of 2/10, n/30. the cost of the items sold is $4,000. shilling uses the perpetual - inventory system and the gross method. the journal entry or entries that shilling will make on may 1 is (are): multiple choice account title debit credit sales 5,800 accounts receivable 5,800 account title debit credit accounts receivable 5,800 sales 5,800 cost of goods sold 4,000 merchandise inventory 4,000 account title debit credit accounts receivable 5,800 sales 5,800 account title debit credit accounts receivable 4,000 sales 4,000 account title debit credit sales 5,800 accounts receivable 5,800 cost of goods sold 4,000 merchandise inventory 4,000

Explanation:

Step1: Record sales on account

When merchandise is sold on credit, accounts receivable is debited for the selling - price amount and sales is credited for the same amount. Here, the selling price of merchandise sold is $5,000, so we debit Accounts Receivable $5,000 and credit Sales $5,000.
Debit Accounts Receivable: $5,000
Credit Sales: $5,000

Step2: Record cost of goods sold

Under the perpetual inventory system, we also need to record the cost of goods sold. The cost of the goods sold is $4,000. We debit Cost of Goods Sold $4,000 and credit Merchandise Inventory $4,000.
Debit Cost of Goods Sold: $4,000
Credit Merchandise Inventory: $4,000
The correct journal - entry has two parts:

1. Debit Accounts Receivable $5,000; Credit Sales $5,000
2. Debit Cost of Goods Sold $4,000; Credit Merchandise Inventory $4,000

Answer:

Account Title | Debit | Credit
--- | --- | ---
Accounts Receivable | 5,000 |
Sales | | 5,000
Cost of Goods Sold | 4,000 |
Merchandise Inventory | | 4,000