Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Journal Entries: Debits and Credits

Financial Accounting

2. Transaction Analysis

Journal Entries: Debits and Credits

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Multiple Choice

Salmone Company reported the following transactions during the year:- Purchased inventory for $5,000 on account- Sold inventory costing $3,000 for $6,000 cashWhich of the following is the correct journal entry to record the sale of inventory?

Debit Cash $6,000; Credit Sales Revenue $6,000; Debit Cost of Goods Sold $3,000; Credit Inventory $3,000

Debit Cash $3,000; Credit Sales Revenue $3,000; Debit Cost of Goods Sold $6,000; Credit Inventory $6,000

Debit Inventory $3,000; Credit Sales Revenue $3,000; Debit Cash $6,000; Credit Cost of Goods Sold $6,000

Debit Sales Revenue $6,000; Credit Cash $6,000; Debit Inventory $3,000; Credit Cost of Goods Sold $3,000

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Verified step by step guidance

Understand the nature of the transaction: The company sold inventory costing $3,000 for $6,000 cash. This transaction involves two key components: (1) recording the revenue from the sale and (2) recording the cost of goods sold (COGS) and reducing inventory.

Step 1: Record the revenue from the sale. Since the company received $6,000 in cash, you need to debit the Cash account for $6,000. To recognize the revenue, you credit the Sales Revenue account for $6,000.

Step 2: Record the cost of goods sold (COGS). The inventory sold had a cost of $3,000. To reflect this expense, you debit the Cost of Goods Sold account for $3,000.

Step 3: Reduce the Inventory account. Since the inventory costing $3,000 has been sold, you need to credit the Inventory account for $3,000 to decrease its balance.

Combine the entries: The journal entry will include (1) Debit Cash $6,000, Credit Sales Revenue $6,000, (2) Debit Cost of Goods Sold $3,000, and Credit Inventory $3,000. This ensures both the revenue and expense sides of the transaction are properly recorded.