A company purchased inventory on account. The inventory costs $2,000 and is expected to sell for $3,000. How should the company record the purchase using a perpetual inventory system? 1. Inventory 2,000 Accounts Payable 2,000 2. Cost of Goods Sold 2,000 Deferred Revenue 1,000 Sales Revenue 3,000 3. Cost of Goods Sold 2,000 Accounts Payable 2,000 4. Cost of Goods Sold 2,000 Gain 1,000 Accounts Payable 3,000 Multiple Choice Option 1 Option 2 Option 3 Option 4

Question

Business

Aniyah Copeland

4 June, 08:22

A company purchased inventory on account. The inventory costs $2,000 and is expected to sell for $3,000. How should the company record the purchase using a perpetual inventory system? 1. Inventory 2,000 Accounts Payable 2,000 2. Cost of Goods Sold 2,000 Deferred Revenue 1,000 Sales Revenue 3,000 3. Cost of Goods Sold 2,000 Accounts Payable 2,000 4. Cost of Goods Sold 2,000 Gain 1,000 Accounts Payable 3,000 Multiple Choice Option 1 Option 2 Option 3 Option 4

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Answers (2)

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Louis Velasquez · Answer 1

Option 1

Explanation:

When inventory is purchased, it may be purchased on account/credit or with cash.

Irrespective of the way it is purchased, a debit entry is posted to inventory (with the cost of the items purchased), however if purchased using cash, cash is credited.

If purchased on account or credit, the credit entry goes to the accounts payable account.

Subsequently, when cash is paid, debit accounts payable and credit cash.

Stephen Archer · Answer 2

The correct answer is option (1) Inventory 2,000 Accounts Payable 2,000

Explanation:

In the cause of purchasing an inventory, purchasing can be done on credit account or with cash.

Not minding the way an inventory is purchased, an inventory is posted to a debit entry indicating the cost of the purchased goods.

Although, if an inventory is purchased with cash, the cash is credited.

If it is purchased on credit, the entry goes to the payable account