Using a perpetual inventory system, how should a company record the sale of inventory costing $510 for $1,160 on account

1. Debit Accounts Receivable for $1,160

             Credit Sales for $1,160

2. Debit Cost of Goods Sold for $510

               Credit Inventory for $510

Explanation:

The goods were sold on account and so are Accounts Receivables which means Accounts Receivables will be debited. Sales will be credited to reflect an increase as it is an Income account.

The Cost of Goods sold will also have to be recorded. As it is an expense, it will be debited to reflect it. The Inventory account will be credited to reflect that the goods have now left inventory and have been sold.

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