Use the following information for questions

-Assuming Chu uses a perpetual inventory system, which entry would have been made to account for the April 1 sale?
A)Debit: "Cost of goods sold" and Credit: "Inventory" $350
B)Debit: "Cost of goods sold" and Credit: "Purchases" $350
C)Debit: "Cost of goods sold" and Credit: "Purchases" $314
D)Debit: "Cost of goods sold" and Credit: "Inventory" $314

Question

Use the following information for questions 
 
-Assuming Chu uses a perpetual inventory system, which entry would have been made to account for the April 1 sale?
A)Debit: "Cost of goods sold" and Credit: "Inventory" $350 
B)Debit: "Cost of goods sold" and Credit: "Purchases" $350 
C)Debit: "Cost of goods sold" and Credit: "Purchases" $314 
D)Debit: "Cost of goods sold" and Credit: "Inventory" $314

Quizplus · Accepted Answer

In a perpetual inventory system, cost of goods sold is credited and inventory is debited for the sale of goods. The cost of goods sold is determined by the cost of the specific units sold. As per the given information, the cost of each unit is $314. Therefore, the correct entry would be Debit: "Cost of goods sold" and Credit: "Inventory" $314. Option A and B are incorrect because they credit "Inventory" instead of debiting it. Option C is incorrect because it assumes that the cost of each unit is $350, which is not given in the information provided.

Use the Following Information for Questions