Inventory of $100 000 was purchased on credit.The journal entry is:

Question

Quizplus · Accepted Answer

When inventory is purchased on credit, it means that a liability is incurred in the form of accounts payable. Therefore, the best journal entry would be to debit Inventory (asset) and credit Accounts payable (liability). Option A is incorrect because there is no cash involved in the transaction. Option C is incorrect because it would be used if inventory was sold on credit, not purchased. Option D is incorrect because accrued expenses refer to expenses that have been incurred but not yet paid, which is not the case in this transaction.

Inventory of $100 000 Was Purchased on Credit