Question

company a purchases goods for cash on january 15. they purchase 10 items at a cost of $50 per item. 5 of these items are sold on january 29 for $700 cash. what is/(are) the entry/(ies) on january 29 to record the sale of the goods?

Answer 1

To record the sale of 5 items on January 29, Company A would debit the Cash account for $700, credit the Sales account for $700, debit Cost of Goods Sold for $250, and credit Inventory for $250.

Step-by-step explanation:

The question involves recording the sale of goods in accounting terms on the date of the sale. On January 29, Company A sold 5 items for a total of $700 cash. The journal entries on January 29 to record the sale would involve two accounts: Cash and Sales for the credit side, and Cost of Goods Sold and Inventory for the debit side.

Journal Entry

Debit Cash $700 (increase in assets)

• Credit Sales $700 (increase in equity – recording of revenue)
• Debit Cost of Goods Sold $250 (expense - 5 items at $50 cost each)
• Credit Inventory $250 (reduction of assets – 5 items at $50 cost each moved to cost of goods sold)

This entry reflects the cash received and the revenue earned from the sale, and records the cost of the goods that were sold, which reduces inventory and records the expense (COGS).