Assume a perpetual inventory system.A purchase on credit for $1 650 including 10% GST would be recorded in the purchases journal as:
A)debit to Inventory $1 650,credit to GST clearing account $150,credit to Accounts payable $1 500.
B)debit to Inventory $1 500,debit to GST clearing account $150,credit to Accounts payable $1 650.
C)debit to Inventory $1 500,credit to Accounts payable $1 500.
D)none of the above

Question

Quizplus · Accepted Answer

In a perpetual inventory system, the inventory is recorded at its net cost, excluding GST. The GST is recorded separately in the GST clearing account. Therefore, the inventory is debited for $1,500, GST clearing account is debited for $150, and accounts payable is credited for the total amount of $1,650.

Assume a Perpetual Inventory System