Under the perpetual inventory system, in addition to making the entry to record the sale, the seller would
A)debit Merchandise Inventory and credit Cost of Goods Sold.
B)debit Cost of Goods Sold and credit Purchases.
C)debit Cost of Goods Sold and credit Merchandise Inventory.
D)make no additional entry until the end of the period.

Question

Quizplus · Accepted Answer

When a sale is made under the perpetual inventory system, the seller needs to update their inventory and cost of goods sold accounts in real-time. The entry to record the sale would include debiting Accounts Receivable (or cash) and crediting Sales Revenue. In addition to this entry, the seller would also need to debit Cost of Goods Sold (to recognize the expense of the inventory sold) and credit Merchandise Inventory (to reduce the amount of inventory on hand). Therefore, choice C is the correct answer.

Under the Perpetual Inventory System, in Addition to Making the Entry