double entry items (20 pts)

1. Dr Cash
Cr. Sales
Dr. Purchases
Cr. Inventory

2. Dr. Inventory
Cr. Cash

1. Dr Cash
Cr Sales
Double entry 並不關stock account 事，因為日常運作中，Sales account就是作紀錄Stock 用的。要到年終才開Stock account的。

2. Dr Purchases
Cr Cash
道理和以上一樣，Purchases account已作紀錄Stock之用。

First of all, you have to know whether inventory record is being kept by the company.
If no inventory record is being kept, then very straight forward,
(1) Dr. Cash Cr. Sales
(2) Dr. Purchases Cr. Cash
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If inventory record is being kept, then
(1) Dr. Cash Cr. Sales
Now, you have to transfer out the cost of inventory in respect of the goods sold. the entry is then
Dr. Cost of Goods Sold Cr. Inventory , at a predefined costing method e.g. FIFO, Weighted Average etc..
(2) Dr. Inventory Cr. Cash
Please note that the intital purchase is charged to the inventory account instead of the purchase account. The detail of the goods will then be recorded in the inventory record at cost, including direct cost thereof