Answer:
A) Finished Goods
Explanation:
Instead of finished goods it should be merchandise inventory or just inventory. Inventory is an asset account, and when it decreases it must be credited. In this case inventory decreases because the goods are shipped to the clients.
You should complete the journal entry with a debit to accounts receivable or cash, depending on the sales terms.
On a separate entry, you should credit sales revenue and debit cost of goods sold.
- Dr Cash / Accounts receivable
- Cr Finished Goods Inventory
- Dr Cost of Goods Sold
- Cr Sales Revenue
