Final answer:
To record the sale of 25 jet skis by Omega.com, debit Accounts Receivable or Cash for $175,000 and credit Sales Revenue for the same amount; then, debit Cost of Goods Sold for $125,000 and credit Inventory for $125,000.
Step-by-step explanation:
When Omega.com sold 25 jet skis for $7,000 each, which cost $5,000 each to purchase, the entry to record the sale would involve two parts: recognizing the revenue from the sales and the cost of the goods sold (COGS). The total revenue is calculated by multiplying the number of jet skis sold by the selling price per unit, which is 25 jet skis × $7,000 = $175,000 total revenue. The COGS is the total cost to Omega.com for purchasing these jet skis, calculated as 25 jet skis × $5,000 = $125,000.
To record the sale, the following journal entry is made:
- Debit Accounts Receivable or Cash for $175,000 (this records the inflow of cash or the claim to cash from the sale).
- Credit Sales Revenue for $175,000 (this records the revenue earned from the sale).
- Debit Cost of Goods Sold (COGS) for $125,000 (this reflects the cost associated with the jet skis sold).
- Credit Inventory for $125,000 (to reduce the inventory since the jet skis have been sold).