One of your friends, who is also a classmate, came to you in the library and asked
Question:
One of your friends, who is also a classmate, came to you in the library and asked you the following question:
“I don’t understand why I need to make two journal entries to record the sale of goods. For example, if a company sold goods with a cost of $25,000 for $60,000 cash, why can’t I just record it as follows?
Cash ..................................... 60,000
Inventory ............................. 25,000
Gross Profit ......................... 35,000
This entry reflects what actually happened, so why isn’t it correct?”
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Related Book For
Understanding Financial Accounting
ISBN: 9781119406921
2nd Canadian Edition
Authors: Christopher D. Burnley
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