How do I record this transaction? Sold inventory on account for $500, cost of merchandise sold was $300. (Record the sale first and then the cost.)
To record the transaction of selling inventory on account for $500 and the cost of merchandise sold for $300, follow these steps:
1. Record the sale:
- Debit Accounts Receivable: $500
- Credit Sales Revenue: $500
2. Record the cost of merchandise sold:
- Debit Cost of Goods Sold: $300
- Credit Inventory: $300
Here's the summary of the transaction:
Accounts Receivable $500
Sales Revenue $500
Cost of Goods Sold $300
Inventory $300
By following these steps, you have recorded the sale and the cost of merchandise sold in your accounting records.
To record this transaction, you would need to follow these steps:
1. Set up the appropriate accounts: In your accounting system, make sure you have accounts set up for "Sales" and "Cost of Goods Sold." If these accounts don't exist, create them.
2. Record the sale: To record the sale, you would debit your Accounts Receivable account (an asset account) and credit your Sales account (a revenue account).
- Debit Accounts Receivable: Increase the amount owed to you by the customer by $500.
- Credit Sales: Increase your revenue by $500.
The journal entry to record the sale would be as follows:
Accounts Receivable (Debit) $500
Sales (Credit) $500
3. Calculate the Cost of Goods Sold (COGS): COGS represents the cost you incurred to produce the goods sold. In this case, the cost of merchandise sold was $300.
4. Record the cost of goods sold: To record the cost of goods sold, you would debit your COGS account and credit your Inventory account.
- Debit COGS: Increase your expense by $300.
- Credit Inventory: Decrease the value of your inventory by $300.
The journal entry to record the cost of goods sold would be as follows:
Cost of Goods Sold (Debit) $300
Inventory (Credit) $300
By following these steps, you will accurately record the sale and the cost of goods sold for this transaction.