Question

The journal entry to record the receipt of inventory purchased for cash in a perpetual inventory system would be a. Jan. 1Inventory1,500 Cash1,500 b. Jan. 1Cash1,500 Accounts Receivable1,500 c. Jan. 1Purchases1,500 Accounts Payable1,500 d. Jan. 1Office Supplies1,500 Cash1,500

Answer 1

Answer: a. Jan. 1 Inventory 1,500 Cash 1,500

Explanation:

To record the above transaction under a perpetual inventory system you do the following,

DR Inventory $1,500

CR Cash $1,500

(To record cash purchase of Inventory)

Inventory is rising so it is debited which is what you do when an asset risese. Cash (another asset) reduced so it is credited as is done to an asset as it reduces.

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