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CMA Intermediate · Cost Accounting · Integrated Accounting System

In integrated accounts, which account is debited when finished goods are sold on credit at a selling price above cost?

Sundry Debtors Account is debited with the full sale price, and Sales or Costing Profit and Loss Account is credited. This records the receivable at invoice value, while finished goods are separately relieved at cost through a cost of sales entry.

  1. ACosting Profit and Loss Account is debited with the sale price
  2. BSundry Debtors Account is debited with the sale priceCorrect
  3. CFinished Goods Control Account is debited with the sale price
  4. DSales Account is debited with the sale price

Explanation

A credit sale creates a receivable, so Sundry Debtors is debited with the invoice value and Sales (Costing P&L) is credited. Separately, cost of sales is debited and Finished Goods Control credited at cost. Debiting Sales or Finished Goods with the sale price would be the wrong side or wrong value.

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