The journal entry to record the purchase of $7,500 of inventory on account under the perpetual inventory system is:
A)debit Inventory, $7,500; credit Cash, $7,500.
B)debit Purchases, $7,500; credit Accounts Payable, $7,500.
C)debit Inventory, $7,500; credit Accounts Payable, $7,500.
D)debit Cost of Goods Sold, $7,500; credit Inventory, $7,500.

Question

Quizplus · Accepted Answer

Under the perpetual inventory system, inventory purchases are recorded by debiting the Inventory account and crediting the Accounts Payable account. Therefore, the correct journal entry to record the purchase of $7,500 of inventory on account is to debit Inventory for $7,500 and credit Accounts Payable for $7,500. Option A is incorrect because cash was not involved in the transaction. Option B is incorrect because Purchases is an account used under the periodic inventory system to record purchases of merchandise for resale. Option D is incorrect because Cost of Goods Sold is an expense account used to record the cost of merchandise sold.

The Journal Entry to Record the Purchase of $7,500 of Inventory