Journal entry to record the sale of merchandise in cash



[Q1] The entity sold merchandise at the sale price of $50,000 in cash.
The cost of merchandise sold was $30,000.
Prepare a journal entry to record this transaction.

[Journal Entry]
When merchandise is sold, two journal entries are recorded.
(1) Journal entry to record sales revenue
(2) Journal entry to record the cost of sales

This is the journal entry to record sales revenue.

  Debit Credit
Cash 50,000  
     Sales revenue   50,000

[Notes]
Debit: Increase in cash
Credit: Increase in sales revenue

[Journal Entry]
This is the journal entry to record the cost of sales.

  Debit Credit
Cost of sales 30,000  
     Merchandise   30,000

[Notes]
Debit: Increase in cost of sales
Credit: Decrease in merchandise
When merchandise is sold, the quantity of merchandise owned by an entity decreases.

 

 

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