BetterBuy Sells a Computer from Inventory for $599 on Credit

question 63

Multiple Choice

BetterBuy sells a computer from inventory for $599 on credit.BetterBuy originally bought the computer from IBM for $395 and uses the perpetual inventory system.How is the sale recorded in BetterBuy's journal entries?

• A)Debit Cash for $599,credit Sales for $599;debit Cost of goods sold for $395 and credit Inventory for $395.
• B)Debit Accounts Receivable for $599,credit Inventory for $395,and credit gross profit for $204.
• C)Debit Accounts Receivable for $599,credit Sales for $599;debit Cost of Goods Sold for $395 and credit Inventory for $395.
• D)Debit Inventory for $395,debit Cost of Goods Sold for $204,and credit Accounts Receivable for $599.

---

Definitions:

Footnotes

Supplementary notes at the bottom of financial statements providing additional detail about data or items on the statements.

Off-Balance-Sheet Financing

A form of financing in which companies do not record certain assets or liabilities on the balance sheet to improve financial ratios and maintain compliance with debt covenants.

Current Liability

This represents a company's debts or obligations that are expected to be paid off within a year, including accounts payable, short-term loans, and accrued expenses.

Long Term

Refers to assets, liabilities, or investments that are expected to last or be in use for a period longer than one year.