Missouri Company uses a perpetual inventory system. On October 1, Missouri Company sold inventory on account in the amount of $6,500 to Montebello Company, terms 1/10, n/30. The items cost Missouri $4,200. On October 4, Montebello returns some of the inventory. This inventory had a selling price of $500 and a cost of $200. On October 8, Montebello Company paid Missouri Company the amount due on that date.What journal entry (entries) will Missouri prepare on October 1 to record this sale?
A. Debit Accounts Receivable and credit Sales Revenue for $6,500.
B. Debit Cost of Goods Sold for $4,200, debit Gross Profit for $2,300, and credit Sales Revenue for $6,500.
C. Debit Sales Revenue for $6,500 and credit Accounts Receivable and credit for $6,500; debit Cost of Goods Sold and credit Inventory for $4,200.
D. Debit Accounts Receivable and credit Sales Revenue for $6,500; debit Cost of Goods Sold and credit Inventory for $4,200.
Answer: D
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