Question

QUESTION 4 2 points Save Answer Issued an original invoice for R15 000 to Max, profit is calculated at 15% on cost. The entity uses control accounts. Choose the correct entry to account for this transaction: Debit Sales R15 000, Credit Debtors control R15 000; Debit Cost of Sales R11 250, Credit Inventory R11 250 0 0 Debit Sales R15 000, Credit Debtors control / Max R15 000; Debit Cost of Sales R13 043, Credit Inventory R13 043 Debit Sales R15 000, Credit Debtors control; R15 000; Debit Inventory R13 043, Credit Cost of Sales R13 043. 0 Debit Sales R15 000, Credit Debtors control / Max R15 000; Debit Cost of Sales R11 250, Credit Inventory R11 250 0

original invoice

Answer 1

Invoice value inclusive of profit is R15000

Profit is at 15%

Assume cost of sales is 100

then invoice value will be 115 that is 100 + 15% profit, cost of sales is 100

if invoice value is 15000, cost of sales = 15000*100 / 115 that is R13043

So the correct answer is "Option B"

Since cost of sales is an expense, it will be debited and the inventory being an asset, the outgoing one will be credited