Question

On March 2, Borst Company sold $800,000 of merchandise on account to McLeena Company, terms 2/10, n/30. The cost of the merchandise sold was $540,000. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit | 800000 800000 (To record credit sale) Inventory (To record cost of merchandise sold) eTextbook and Media List of Accounts Assistance Used Attempts: 1 of 4 used Submit Answer Save for Later Last saved 3 minutes ago. Saved work will be auto-submitted on the due date.

Answer 1

The accounting entries for Borst Company's credit sale to McLeena Company involve recording the receivable and revenue from the sale, and the cost of goods sold against inventory.

Step-by-step explanation:

When Borst Company sells merchandise on account to McLeena Company, two primary transactions need to be recorded: the sales transaction and the cost of goods sold (COGS). The sales transaction is a credit sale, which means that Borst Company would make the following entry in their accounting records:

• Accounts Receivable - $800,000
• Sales Revenue - $800,000

(To record credit sale of merchandise)

As for the cost of the merchandise sold, the entry would look like this:

• Cost of Goods Sold - $540,000
• Inventory - $540,000

(To record the cost of merchandise sold)

This records both the revenue received from the sale and the cost associated with the sale, directly affecting the company's gross profit.