AccountingHub
C3

Selling merchandise

Sell units from the shelf and watch two entries fire for every sale.

Step 1 of 5

Buy 10 units at $50 each, on credit, terms 2/10, n/30.

The shelf
0 units
at $0 each of 10 bought
Cash
$500
Merchandise inventory
$0

A sale on credit needs two entries. One records revenue at the price the customer owes: debit Accounts receivable, credit Sales. The other moves the goods' cost out of inventory into . Miss the second entry and inventory is overstated for as long as the goods stay on the books.

A resalable return reverses both. and are contra-revenue accounts, subtracted from Sales to get net sales — neither one touches inventory.