MANAGEMENT

Detailed explanation-1: -When companies sell merchandise inventory, the transaction requires two journal entries: the first entry records the revenue from the sale at the selling price and the second entry decreases the inventory account and records the expense of the sale at cost.

Detailed explanation-2: -▼ Merchandise Inventory is an asset account that is decreasing. You receive full payment for the sale AFTER the discount period, which is what you had anticipated. You receive reduced payment for the sale WITHIN the discount period, which is what you had anticipated. ▲ Cash is an asset account that is increasing.

Detailed explanation-3: -Merchandising companies purchase goods that are ready for sale and then sell them to customers. Merchandising companies include auto dealerships, clothing stores, and supermarkets, all of which earn revenue by selling goods to customers.

Detailed explanation-4: -each purchase and sale of merchandise is recorded in an inventory account.