A company purchased inventory for $700 per unit. The company later sold one unit of the inventory for cash of $2400. Under the perpetual inventory system, which accounts will be debited to record the sale?

Question

Quizplus · Accepted Answer

Under the perpetual inventory system, the sale of inventory is recorded by debiting Cash for the amount of cash received and crediting Sales Revenue for the amount of revenue earned. The cost of goods sold is also recorded by debiting Cost of Goods Sold and crediting Inventory for the cost of the inventory sold. In this case, the company purchased the inventory for $700 and sold it for $2400, so the cost of goods sold is $700.

A Company Purchased Inventory for $700 Per Unit