The company sold 500 units of
merchandise at the price of $11,000. Customer paid $9,000 in
cash at the time of sale.
Analysis of Transaction
Note: This transaction includes both "REVENUE" and "EXPENSE"
components.
(1) REVENUE side
Steps |
|
Debit or
Credit ? |
1 |
Increase in Assets (Cash) by $9,000 |
Debit |
2 |
Increase in Assets (Accounts Receivable) by $2,000 |
Debit |
3 |
Increase in Revenue (Sales) by $11,000 |
Credit |
(2) EXPENSE side
Steps |
|
Debit or
Credit ? |
1 |
Increase in Expenses (Cost of Merchandise Sold) by $5,000
($6,000 / 600 units = $10 per unit)
($10 per unit X 500 units sold = $5,000 cost) |
Debit |
2 |
Decrease
in Assets (Merchandise) by $5,000 |
Debit |
(1) REVENUE
Journal Entry
|
|
Debit |
Credit |
|
Cash |
9,000 |
|
|
Accounts
Receivable |
9,000 |
|
|
|
Sales Revenue |
|
11,000 |
Description of Journal Entry
|
Sold merchandise at $11,000
price and received $9,000 in cash. |
Results of Journal Entry
|
Cash balance increases by
$9,000. --> Increase in Assets
Accounts Receivable balance increases by
$2,000. --> Increase in Assets
Sales Revenue account balance increases by $11,000. --> Increase in
Revenue |
|