Question

Santa Materals sold goods for 3,200 plus 5% sales tax to a customer on account, terms n/30. Santa Materials uses the perpetual inventory system and the cost of goods sold was $1,000. Which entries are required to record this transaction?

a. debit account receivable $3,360; credit sales tax payable $160; credit sales tax $3,200, debit cost of goods sold $1,000; credit merchandise inventory $1,000
b. debit cash $3,200; credit sales $3,200; debit cost of goods sold $1,000: credit merchandise inventory $1,000
c. debit accounts receivable $3,360; credit sales $3,360; debit cost of goods sold $1,000; credit merchandise inventory $1,000
d. debit accounts receivable $3,200; credit sales $3,200; befit cost of goods sold $1,000; credit merchandise inventory $1,000

Answer 1

The correct journal entries for the transaction are: debit Accounts Receivable $3,360; credit Sales $3,360; debit Cost of Goods Sold $1,000; credit Merchandise Inventory $1,000.

Step-by-step explanation:

The correct journal entries to record this transaction are:

Option C:

1. Debit Accounts Receivable $3,360
2. Credit Sales $3,360
3. Debit Cost of Goods Sold $1,000
4. Credit Merchandise Inventory $1,000

This transaction involves the sale of goods on account, which increases the accounts receivable and records the revenue in the sales account. The cost of goods sold is debited to expense it and reduce the merchandise inventory.

The sales tax payable and sales tax accounts are not affected in this transaction because the tax has already been included in the sales price.