A company uses the perpetual inventory method.To record a sale of merchandise on account will require an entry to record revenue and an entry to record cost of goods sold.

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Under the perpetual inventory method, each sale of merchandise is recorded in the inventory account as well as the cost of goods sold account. When a sale is made on account, the revenue account is also credited, but this does not affect the recording of cost of goods sold. Therefore, separate entries are required to record revenue and cost of goods sold.

A Company Uses the Perpetual Inventory Method