Question 13: A company sells inventory with a cost of $50,000 for $80,000 on account. Provide a detailed explanation of the journal entries and subsequent adjustments to record the sale, cost of goods sold, and accounts receivable.

Requirements:

1. Record the journal entry to recognize the sale of inventory on account.
2. Post the journal entry to the Accounts Receivable and Sales Revenue accounts in the ledger.
3. Calculate the cost of goods sold (COGS) associated with the sale.
4. Record the journal entry to recognize the COGS.
5. Post the journal entry to the COGS account in the ledger.
6. Analyze how the sale transaction affects the company's balance sheet and income statement.
7. Discuss the importance of accurately tracking inventory costs for financial reporting.
8. Evaluate the impact of inventory errors on cost of goods sold and net income.
9. Discuss strategies for managing accounts receivable and minimizing bad debts.
10. Illustrate how sales transactions and related adjustments are reflected in financial statements.