Company A sells blankets. The following transactions occurred during March: Mar

Question

Company A sells blankets. The following transactions occurred during March: Mar 3 Placed an order on credit with the blanket supplier for 100 blankets at a price of $70 each. Mar 7 Hired a new employee. The employee will earn $80,000 per year plus benefits. Mar 17 Received the order placed on March 3. No payment is yet made to the supplier. Mar 25 Sold 60 of the blankets purchased on March 3. The sale was on credit. Mar 28 Received half of the payment for the March 25 sale. The journal entries for March 25 include a credit of $4,200 to which account? Select one: a. accounts payable b. cost of goods sold c. inventory d. sales revenue

Explanation / Answer

The answer is "c.inventory"

As when sales is made the cost of goods is transferred by debiting Cost of goods sold and crediting Inventory.

So, $4,200 (60 x70) the cost of goods is transferred by crediting inventory.

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