Cumberland Co. sells $2,000 of inventory to Hancock Co. for cash. Cumberland paid $1,250 for the merchandise. Under a perpetual inventory system, which of the following journal entry (ies) would be recorded?

Cash (Debit) $2,000

Sales (Credit) $2,000

Cost of Merchandise Sold (Debit) $1,250

Merchandise Inventory (Credit) $1,250

Explanation:

Cash (Debit) : Cash increase because it is a Cash Sale, cash increases by debit.

Sales (Credit) : to register the sale, Sales (income) increases by credit.

Cost of Merchandise Sold (Debit) : to record the cost of the merchandise sold, the costs increase by debit.

Merchandise Inventory (Credit) : to record the inventory output of the merchandise sold, inventory decreases by credit.