Mack Industries Uses the Periodic Inventory System

question 94

Multiple Choice

Mack Industries uses the periodic inventory system. What is the entry to record a $300 sale on account to customer Jake Sanders, with a $100 cost of sale?

• A) Debit Accounts Receivable for $300; credit Sales for $300; debit Cost of Goods Sold for $100; credit Merchandise Inventory for $100.
• B) Debit Accounts Receivable for $300; credit Sales for $100; debit Cost of Goods Sold for $300; credit Merchandise Inventory for $100.
• C) Debit Sales for $300; credit Accounts Receivable for $300.
• D) Debit Accounts Receivable for $300; credit Sales for $300.

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Definitions:

Interest Payments

Payments made to a lender by a borrower in return for the use of borrowed money, typically calculated as a percentage of the principal.

Net New Equity

The difference between equity capital a company raises by issuing new shares and the capital it uses to buy back existing shares.

Dividend Payments

Allocations of a segment of a company's profits, determined by the board of directors, to a category of its stockholders.

Current Liabilities

These are obligations or debts that a company is expected to pay within one year.