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Scilla [17]
3 years ago
9

Ace Bonding Company purchased merchandise inventory on account. The inventory costs $3,700 and is expected to sell for $6,400. H

ow should Ace record the purchase? Inventory 3,700 Accounts payable 3,700 Cost of goods sold 3,700 Deferred sales revenue 2,700 Sales in advance 6,400 Cost of goods sold 3,700 Inventory payable 3,700 Cost of goods sold 3,700 Profit 2,700 Sales payable 6,400
Business
1 answer:
snow_lady [41]3 years ago
7 0

Answer:

Ace records the purchase:

Inventory 3,700 Accounts payable 3,700

Explanation:

Ace Bonding Company purchased merchandise inventory on account. The inventory costs $3,700.

Following the Accrual accounting - an accounting method that revenue or expenses are recorded when a transaction occurs rather than when payment is received or made. At that time of purchasing, the company has not sold the merchandise yet. The entry records the purchase:

Debit Inventory $3,700

Credit Accounts payable $3,700

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Journal entries are prepared to record business transactions in the accounting books.  They show which account is to be debited and which is to be credited in the ledger.

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<u>Analysis of total cost over the 5 year period</u>

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