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 adjust cost of goods sold for the ending inventory still on hand will include which of the following?
A) Debit Inventory for $6,250
B) Credit Cost of Goods Sold for $11,250
C) Credit Purchases for $10,200
D) Credit Inventory for $5,000

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 adjust cost of goods sold for the ending inventory still on hand will include which of the following?
A) Debit Inventory for $6,250 
B) Credit Cost of Goods Sold for $11,250 
C) Credit Purchases for $10,200 
D) Credit Inventory for $5,000

Quizplus · Accepted Answer

Since the question is asking for the journal entry to adjust cost of goods sold for the ending inventory still on hand, we need to credit the cost of goods sold account and debit the inventory account for the same amount. The ending inventory still on hand is $6,250, so we need to debit inventory for that amount. Therefore, the correct answer is A, Debit Inventory for $6,250. None of the other answer choices reflect this adjustment.

FAD Company Uses a Periodic Inventory System and Its Inventory