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On March 2, Borst Company sold $800,000 of merchandise on account to McLeena Company, terms 2/10, n/30. The cost of the merchandise sold was $540,000. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit | 800000 800000 (To record credit sale) Inventory (To record cost of merchandise sold) eTextbook and Media List of Accounts Assistance Used Attempts: 1 of 4 used Submit Answer Save for Later Last saved 3 minutes ago. Saved work will be auto-submitted on the due date.

User Jeanpaul
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Final answer:

The accounting entries for Borst Company's credit sale to McLeena Company involve recording the receivable and revenue from the sale, and the cost of goods sold against inventory.

Step-by-step explanation:

When Borst Company sells merchandise on account to McLeena Company, two primary transactions need to be recorded: the sales transaction and the cost of goods sold (COGS). The sales transaction is a credit sale, which means that Borst Company would make the following entry in their accounting records:

  • Accounts Receivable - $800,000
  • Sales Revenue - $800,000

(To record credit sale of merchandise)

As for the cost of the merchandise sold, the entry would look like this:

  • Cost of Goods Sold - $540,000
  • Inventory - $540,000

(To record the cost of merchandise sold)

This records both the revenue received from the sale and the cost associated with the sale, directly affecting the company's gross profit.

User Dave Gregory
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