Question

We always sell pens at 8. We sold a pen for7 because it was damaged. Record the sale at:

1) -7
2) -8

Answer 1

To record the sale of a damaged pen sold for 7, the entry should show the receipt of 7, with an additional note regarding the usual price of 8 and the reason for the discount. The number should not be recorded as negative in a sales ledger; instead, it should be noted that it sold at a discount.

Step-by-step explanation:

When recording the sale of a damaged pen that is typically sold for 8 but was sold for 7, the entry should reflect the actual sale price. There appears to be a misunderstanding in the options provided for how to record the sale. The recording should reflect the receipt of 7, with additional notes indicating the normal price (8) and the reason for the reduced price (damage).

In accounting terms, this transaction will decrease your inventory value by the cost of the pen and increase your cash or sales revenue by 7. While it's not typical to record a sale as a negative number in the sales ledger, discount or allowance accounts might be used in a more complex accounting system. For basic record-keeping, you might simply note that the pen was sold at a discount due to its damaged condition.

Therefore, the correct entry for your question would be to record the sale at 7, not -7 or -8.