Question

X-Mart purchased $300 of merchandise and paid immediately. Demonstrate the journal entry to record this transaction, assuming the perpetual inventory system is used.

Answer 1

Answer:

See explanation Section

Explanation:

The journal entry to record the purchase of merchandise -

Merchandise Inventory          Debit        $300

Cash                                         Credit           $300

Note: As the perpetual inventory shows the running inventory of cost of goods available for sale. Therefore, every purchase of merchandise will directly debit the merchandise inventory and not the purchase account. Since the company paid immediately, cash decreased.