FAD Company uses a periodic inventory system and its inventory records for the period contain the following information:

-Use the information above to answer the following question.The journal entry necessary at the end of the period to transfer beginning inventory and net purchases to cost of goods sold will include which of the following?
A) Credit Inventory for $6,250
B) Debit Purchases for $11,250
C) Debit Inventory for $6,250
D) Debit Cost of Goods Sold for $11,250

Question

FAD Company uses a periodic inventory system and its inventory records for the period contain the following information:
 
-Use the information above to answer the following question.The journal entry necessary at the end of the period to transfer beginning inventory and net purchases to cost of goods sold will include which of the following?
A) Credit Inventory for $6,250 
B) Debit Purchases for $11,250 
C) Debit Inventory for $6,250 
D) Debit Cost of Goods Sold for $11,250

Quizplus · Accepted Answer

At the end of the period, FAD Company needs to transfer the beginning inventory and net purchases to the cost of goods sold. This means that the cost of goods sold account needs to be debited. The corresponding credit must be made to the inventory account, which is being reduced. Therefore, option D is the correct choice as it debits Cost of Goods Sold for $11,250. None of the other options correctly match the requirements for the journal entry.

FAD Company Uses a Periodic Inventory System and Its Inventory