Question

Landon Jewelers uses the perpetual inventory system. On April 2, Landon sold merchandise with a cost of $1500 for $7000 to a customer on account with terms of 1/15, n/30. The journal entry to record the cost of goods sold would be:

Answer 1

April 2

Accounts Receivable 7000 Dr

Sales Revenue 7000 Cr

Cost of Goods Sold 1500 Dr

Inventory 1500 Cr

Step-by-step explanation:

The perpetual inventory system keeps a continuous account of the changes in the inventory. To record a transaction involving sale of inventory, we will record the sales revenue and cash or accounts receivable to record the sale along with making an entry to record cost of goods sold and changes in inventory against this sale.

The entry for recording cost of goods sold and changes in inventory will be at the cost of the inventory while sale and accounts receivable will be recorded at the selling price.