A client wants to donate five widgets (set up as inventory items) to a charity. In the item setup, the cost is $5 and the sales price is $10. Fifty widgets were originally purchased at $6 per widget.

What is the effect on the General Ledger when this is recorded on a Sales Receipt?

1.Debit COGS $30; credit inventory $30

2.Debit COGS $30; credit inventory $30; debit bank account $50; credit income $50

3.Debit COGS $25; credit inventory $25; debit Bank account funds $50; credit income $50

4.Debit COGS $25; credit inventory $25

5.Debit Donations $30; credit inventory $30