A firm uses the periodic inventory method. Which of the following entries would be made to record a $1 100 purchase of inventory on credit, including GST?
A)The accounting entry would be a $1 100 debit to Accounts payable and a $1 100 credit to Purchases.
B)The accounting entry would be a $1 000 debit to Purchases, a $100 debit to GST Clearing and a $1 100 credit to Accounts payable.
C)The accounting entry would be a $1 000 debit to Inventory, a $100 debit to GST Clearing and a $1 100 credit to Accounts payable.
D)The accounting entry would be a $1 100 debit to Accounts payable, a $1 000 credit to Inventory, and a $100 credit to GST Clearing.

Question

Quizplus · Accepted Answer

In the periodic inventory system, purchases are recorded in the Purchases account. The GST paid is recorded separately in the GST Clearing account. The total payable amount is credited to Accounts Payable.

A Firm Uses the Periodic Inventory Method