Under the perpetual inventory system what is the correct entry to record the cost of the sale of 2 reclining chairs sold to a customer at $1100 per chair including GST? The items were originally purchased on credit at $500 each plus GST of $50 per chair.

Question

Quizplus · Accepted Answer

Under the perpetual inventory system, the cost of goods sold is recorded at the time of each sale by debiting the cost of sales and crediting inventory for the cost of the items sold. In this case, the cost of each chair is $500, so for 2 chairs, the total cost is $1000. Hence, the correct entry is to debit cost of sales and credit inventory for $1000.

Under the Perpetual Inventory System What Is the Correct Entry