A computer manufacturer recently shipped several laptops to a customer (cost: $25,000) and billed the customer $30,000.Which of the following options correctly expresses the accounts that are debited and credited to record this transaction?
A)Debits: Accounts Receivable, Finished-Goods Inventory; credits: Sales Revenue, Cost of
B)Debits: Accounts Receivable, Cost of Goods Sold; credits: Sales Revenue, Finished-Goods
C)Debits: Sales Revenue, Cost of Goods Sold; credits: Accounts Receivable, Finished-Goods
D)Debits: Sales Revenue, Finished-Goods Inventory; credits: Accounts Receivable, Cost of
E)Debits: Accounts Receivable; credits: Finished-Goods Inventory, Proﬁt on Sale.

Question

Quizplus · Accepted Answer

This transaction involves the sale of laptops, which means that the company's Accounts Receivable account should be debited (as the customer will pay at a later date) and the Cost of Goods Sold account should also be debited (to reflect the expense of producing the laptops). On the credit side, the company should credit the Sales Revenue account (to reflect the income from the sale) and the Finished-Goods Inventory account (to reduce the inventory balance since the laptops have been sold). Option B correctly reflects these accounts.

A Computer Manufacturer Recently Shipped Several Laptops to a Customer