Question

Assume Wal-Mart sells two Schwinn mountain bikes for $400 cash. The bikes had previously been recorded in Wal-Mart's Inventory at a total cost of $350. (Analyze and Record)

Answer 1

To analyze and record the sale of two Schwinn mountain bikes by Wal-Mart, we would credit the Cash account for $400 and debit the Inventory account for $350.

Step-by-step explanation:

The question asks us to analyze and record the sale of two Schwinn mountain bikes by Wal-Mart. According to the question, Wal-Mart sold the bikes for $400 cash, which is the selling price. However, the bikes were previously recorded in Wal-Mart's Inventory at a total cost of $350, which represents the cost price. To analyze and record this transaction, we need to record both the revenue from the sale and the decrease in inventory. The journal entry for this transaction would be:

Debit: Cash $400

Credit: Inventory $350