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Jo's Market makes a credit sale for $1,000 with terms of 2/10,n/30. The cost of the merchandise is $400. The required journal entry to record the sale and cost of the sale is: debit Accounts Receivable $1,000 and credit Sales 1,000 debit Accounts Receivable $1,000; credit Sales $1,000; debit Cost of Goods Sold $400; and credit Merchandise Inventory $400 debit Accounts Payable $1,000; and credit Sales $1,000 debit Accounts Receivable $600; credit Sales $600; debit Cost of Goods Sold $400; and credit Merchandise Inventory $400

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Answer:

The answer is: debit Accounts Receivable $1,000; credit Sales $1,000; debit Cost of Goods Sold $400; and credit Merchandise Inventory $400

Explanation:

The journal records should be:

  • Dr Accounts receivable 1,000
  • Cr Sales revenue 1,000

  • Dr Cost of goods sold 400
  • Cr Merchandise inventory 400

Accounts receivable is an asset account, and when assets increase they are debited.

Sales revenue is a revenue account, and when revenue increases it is credited.

COGS is an expense account, and when expenses increase they are debited.

Merchandise inventory is an asset account, and when assets decrease they are credited.

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