Asked by Mahjabin Muntha on May 01, 2024
Verified
In recording the cost of goods sold for cash, based on data available from perpetual inventory records, the journal entry is
A) debit Cost of Goods Sold; credit Sales
B) debit Cost of Goods Sold; credit Inventory
C) debit Inventory; credit Cost of Goods Sold
D) debit Accounts Receivable; credit Inventory
Perpetual Inventory Records
A system of inventory management where updates are made continuously to reflect sales and purchases, ensuring real-time accuracy in inventory counts.
Cost of Goods Sold
The direct costs attributable to the production of the goods sold by a company, including both material and labor costs.
Inventory
The total amount of goods and materials held by a business for the purpose of resale, manufacturing, or repair.
- Comprehend the journal entries for acquisitions and disposals within a perpetual inventory model.
Verified Answer
ZK
Zybrea KnightMay 02, 2024
Final Answer :
B
Explanation :
When goods are sold for cash, the cost of goods sold is recorded by debiting the Cost of Goods Sold account and crediting the Inventory account. This reduces the inventory balance and recognizes the cost of goods sold as an expense. Option A and Option D are incorrect because they do not involve the Inventory account. Option C is incorrect because it suggests that we are reversing an earlier entry that debited Cost of Goods Sold and credited Inventory, which is not the case here.
Learning Objectives
- Comprehend the journal entries for acquisitions and disposals within a perpetual inventory model.