Nelly chemical co and Best Vault Stores sign a consignment agreement, in which.

nelly grants best vault an exclusive right to sell Nelly's Merchandise

Best Vault charge 10% of consignment sales as commission

At the beginning of November, 2020, Nelly ships merchandise costing $36,000 on consignment to Best Vault Stores. Nelly pays $3,750 of freight costs. Best Vault pays $2,250 for local advertisement that are reimbursable from Nelly. During November, Best Vault sells two thirds of the consigned merchandise for $40,000.

At the end of November, 2020, Best Vault notifies Nelly the consignment sales transaction and remit cash back to Nelly. Upon receiving cash remittance. Nelly would post which of the following journal entry?

A: Cash $40,000

Revenue from Consignment $40,000

B: Cash $30,000

Freight expense 3,750

Advertisement expense. 2,250

Commission expense. 4,000

Revenue from consignment. $40,000

C: Cash $7,250

Cost of goods sold 26,500

Advertisement expense. 2,250

Commission expense 4,000

Revenue from Consignment. $40,000

D: Cash $33,750

Advertisement expense 2,250

Commission expense 4,000

Revenue from Consignment $40,000