Question

Which of the following entries would be made to record the purchase of inventory on account, if a company uses the perpetual inventory system?
A) a debit to Accounts Payable and a credit to Purchases

B) a debit to Accounts Payable and a credit to Merchandise Inventory

C) a debit to Merchandise Inventory and a credit to Accounts Payable

D) a debit to Purchases and a credit to Accounts Payable

Answer 1

Answer:

C) a debit to Merchandise Inventory and a credit to Accounts Payable

Explanation:

The journal entry to record the purchase of inventory on account by using the perpetual inventory system is shown below:

Merchandise Inventory A/c Dr XXXXX

      To Accounts Payable A/c               XXXXX

(Being merchandise is purchase on credit)

Simply we debited the merchandise inventory account and credited the account payable account so that the correct posting can be done.