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Assume that a company purchases merchandise for resale on December 20, 2010. The merchandise is still on hand on December 31, the company's year-end. On January 12, 2011, the merchandise is sold to a customer. Explain how the merchandise will be treated on any of the financial statements at year-end. In which year will revenue from the sale be recorded? In which year will cost of goods sold expense be recorded?
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