The journal entry necessary at the end of the period to transfer beginning inventory and net purchases to cost of goods sold will include which of the following?
A) Credit Inventory, $6,250.
B) Debit Purchases, $11,250.
C) Debit Inventory, $6,250.
D) Debit Cost of goods sold, $11,250.

Question

Quizplus · Accepted Answer

At the end of the period, we need to transfer beginning inventory and net purchases to cost of goods sold. This means that we need to debit cost of goods sold for their combined amounts. Therefore, the correct answer is to debit cost of goods sold for $11,250. Choices A and C are incorrect because they credit inventory, which would decrease the inventory balance, and we want to transfer inventory to cost of goods sold instead. Choice B is incorrect because we need to debit either inventory or cost of goods sold, not purchases, to make this transfer.

The Journal Entry Necessary at the End of the Period