Question

In the problem that I am working on it says:

*The cost of all inventory sold in December was 80% of the sales price.

An entry in the problem is: Sold sewer and drainage pipe to Beverly’s Building Products on account for $13,150.

Would I have to do an entry with COGS? I am just a little confused with this

Another entry says: Cash sales for December totalled $52,272

Would this count also?

Answer 1

The entry on sale sball be =

Beverly's building product dr. $13150

To Sales/revenue. Cr. $13150

Yes you have to do an entry with COGS to transfer the amount of stock to COGS.

COGS Dr. $10520 ( cost amount of inventory sold )( 80% of $13150)

To Inventory cr $10520 ( cost of inventory sold)

Being stock lowered down.

No seprate entry for total casg sales shall be done as if we are posting each entry this will automatically be totalled to cash sales in december.