Green Co. ships merchandise costing $60,000 on consignment to Butters Company. Green pays $2,500 of freight costs, and Butters pays $3,200 for local advertising costs that are reimbursable from Green. By the end of the period, Butters has sold one-fourth of the consigned merchandise for $80,000 cash. Butters notifies Green of the sales, retains a 20% commission, and remits the cash due Green. Which of the following entries is correct?
A.
When Butters receives the consigned goods from Green, Butters needs to debit Inventory for the amount of the goods received.
B.
When Butters pays the advertising costs, Butters needs to debit Advertising Expense.
C.
When Butters sells the consigned inventory, Butters needs to record a debit to Sales Revenue.
D.
When Butters receives the consigned inventory from Green, no entry should be made by Butters because the goods are still considered an asset on Green’s books.