Lincoln Fences receives a shipment of goods from its supplier. It pays $40,000 at the time of

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Question:

Lincoln Fences receives a shipment of goods from its supplier. It pays $40,000 at the time of delivery and promises to pay the remaining $200,000 within the next 40 days. What is the appropriate journal entry for this transaction?

Debit cost of goods sold $240,000; credit cash $40,000; credit accounts payable $200,000
Debit inventory $240,000; credit cash $40,000; credit accounts payable $200,000
Debit accounts payable $200,000; debit cash $40,000; credit inventory $240,000
Debit inventory $40,000; credit cash $40,000