Assume Grammar Company uses the periodic inventory system and has a beginning inventory balance of $5,000, purchases of $75,000, and sales of $125,000.Grammar closes its records once a year on December 31.In the accounting records, the inventory account would be expected to have a balance on December 31 prior to adjusting and closing entries that was
A)equal to $5,000.
B)more than $5,000.
C)less than $5,000.
D)indeterminate.

Question

Quizplus · Accepted Answer

Under the periodic inventory system, the inventory account is not updated for purchases or sales during the year. It remains at the beginning balance of $5,000 until year-end adjustments are made.

Assume Grammar Company Uses the Periodic Inventory System and Has