When an inventory item that cost $75 is sold on account for $100, which of the following would be included in the journal entry recording the cost of goods sold?
A)Dr.Cash $100
B)Cr.Cost of goods sold $75
C)Cr.Accounts Receivable $100
D)Cr.Inventory $75

Question

Quizplus · Accepted Answer

The correct entry for recording the cost of goods sold involves debiting the Cost of Goods Sold account to recognize the expense and crediting the Inventory account to remove the cost of the inventory that was sold. Option D, Cr.Inventory $75, correctly reflects the credit to the Inventory account to decrease it by the cost of the item sold.

When an Inventory Item That Cost $75 Is Sold on Account