Use the following information for the following questions:
Windsor Ltd. uses FIFO to cost its inventory. The following information is available for Windsor's inventory of product # 205:
Beginning inventory: $\quad 240$ units $@ \$ 5.28$ per unit
March 1:$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $Purchase of 500 units $@ \$ 5.00$ per unit
April 10:$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $Sale of 200 units $@ \$ 10.20$ per unit
-Assuming Windsor uses the perpetual inventory system, the entry to account for the March 1 purchase is
A) debit Inventory and credit Accounts Payable, $3,500.
B) debit Purchases and credit Accounts Payable, $3,500.
C) debit Accounts Payable and credit Purchases, $3,500.
D) debit Accounts Payable and credit Inventory, $3,500.

Question

Use the following information for the following questions:
Windsor Ltd. uses FIFO to cost its inventory. The following information is available for Windsor's inventory of product # 205:
 Beginning inventory: $\quad 240$ units $@ \$ 5.28$ per unit
March 1:$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $Purchase of 500 units $@ \$ 5.00$ per unit
April 10:$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $Sale of 200 units $@ \$ 10.20$ per unit
-Assuming Windsor uses the perpetual inventory system, the entry to account for the March 1 purchase is
A) debit Inventory and credit Accounts Payable, $3,500.
B) debit Purchases and credit Accounts Payable, $3,500.
C) debit Accounts Payable and credit Purchases, $3,500.
D) debit Accounts Payable and credit Inventory, $3,500.

Quizplus · Accepted Answer

Under the perpetual inventory system, purchases are directly added to the inventory account. The purchase on March 1 of 500 units at $5.00 per unit totals $2,500 (500 units * $5.00), not $3,500. Therefore, none of the provided choices accurately reflect the correct accounting entry for the purchase. However, the intended correct process is to debit Inventory and credit Accounts Payable for the purchase amount, which aligns with option A's structure, despite the numerical error in the question.

Use the Following Information for the Following Questions: Windsor Ltd 240\quad 240240

Use the Following Information for the Following Questions:
Windsor Ltd $\quad 240$