Skiing International uses a perpetual inventory system when recording its purchases and sales of inventory. If the business purchases $8,000 of goods on account, select the correct entry to record the purchase:

Question

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In a perpetual inventory system, purchases of inventory are recorded with a debit to the Merchandise Inventory account and a credit to the Accounts Payable account. Option A and B are incorrect because there is no debit to the Merchandise Inventory account. Option D is incorrect because it records the purchase as a cash transaction when it was made on account.

Skiing International Uses a Perpetual Inventory System When Recording Its