Davis Hardware Company uses a periodic inventory system. How should Davis record the sale of inventory costing $620 for $960 on account?
1. Cost of Goods Sold 620
Purchases 620
Accounts Receivable 960
Sales Revenue 960
2. Accounts Receivable 960
Sales Revenue 960
3. Purchases 620
Gain 340
Sales Revenue 960
4. Accounts Receivable 960
Sales Revenue 620
Gain 340
A) Option 1
B) Option 2
C) Option 3
D) Option 4
Answer: B
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