[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.
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: Increase in cash
Credit: Increase in sales revenue
This is the journal entry to record the cost of sales.
|Cost of sales||30,000|
Debit: Increase in cost of sales
Credit: Decrease in merchandise
When merchandise is sold, the quantity of merchandise owned by an entity decreases.