Iowa Cattle Company uses a periodic inventory system.Iowa purchased cattle from Big D Ranch at a cost of $27,000 on credit.The entry to record the receipt of the cattle would be
A) Purchases ...........................27,000
Accounts Payable ..................27,000
B) Inventory ...........................27,000
Accounts Payable ..................27,000
C) Purchases ...........................27,000
Cash ..............................27,000
D) Inventory ...........................27,000
Cash ..............................27,000

Question

Quizplus · Accepted Answer

Under a periodic inventory system, purchases of inventory are recorded in a Purchases account rather than directly to the Inventory account. Since the purchase was made on credit, Accounts Payable is credited.

Iowa Cattle Company Uses a Periodic Inventory System