Question

Sunrise Flowers sells flowers to a customer on credit for $130 on October 18, with a cost of sale to Sunrise of $50. What entry to recognize this sale is required if Sunrise Flowers uses a; periodic; inventory system?

a) Accounts Receivable $130, Sales $130, Cost of Goods Sold $50, Inventory $50
b) Accounts Receivable $130, Sales $130
c) Accounts Receivable $130, Cost of Goods Sold $50
d) Sales $130, Cost of Goods Sold $50

Answer 1

The correct entry to recognize this sale is option d) Sales $130, Cost of Goods Sold $50.

Step-by-step explanation:

The correct entry to recognize this sale is option d) Sales $130, Cost of Goods Sold $50. When a sale is made on credit, the Accounts Receivable account is debited for the amount of the sale, in this case $130. The Sales account is also credited for $130 to record the increase in sales.

Next, the Cost of Goods Sold account is debited for $50 to record the cost of the goods sold. The Sales account is then credited for $50 to reduce the balance in the Sales account by the cost of the goods sold.