Question

Anderson Furniture sold 15​ desks, with a cost of $9,500​, for $10,250 on account. Anderson uses the periodic inventory system. Which of the following is the correct way to record this​ transaction?"

a) Debit Accounts Receivable $10,250, Credit Sales $10,250
b) Debit Cash $10,250, Credit Inventory $9,500, Credit Sales $750
c) Debit Cash $10,250, Credit Sales $10,250
d) Debit Cash $10,250, Credit Accounts Receivable $10,250
e) Debit Cash $10,250, Credit Inventory $9,500, Credit Cost of Goods Sold $750

Answer 1

The correct record of the transaction under the periodic inventory system is: Debit Cash $10,250 and Credit Sales $10,250, as the sale was made on account without an immediate exchange of cash. Hence, the correct answer is option (c).

Step-by-step explanation:

The correct way to record this transaction is option c) Debit Cash $10,250, Credit Sales $10,250.

When Anderson Furniture sold 15 desks on account for $10,250, they received cash from the customer. Therefore, the entry should include a debit to Cash for $10,250, representing an increase in cash. The counter-entry should credit Sales for $10,250, indicating the revenue generated from the sale.

Option b) involves debiting Cash (correct) but also involves crediting Inventory and Sales in a way that doesn't accurately represent the transaction. Option a) incorrectly debits Accounts Receivable instead of Cash. Option d) involves debiting Cash (correct) but also involves crediting Accounts Receivable, which is unnecessary because the sale was made on account. Option e) involves debiting Cash (correct) but also involves crediting Inventory and Cost of Goods Sold, which is not appropriate in a periodic inventory system.