The journal entry to record a purchase of inventory for cash under the perpetual system includes:

Question

Quizplus · Accepted Answer

In the perpetual system, inventory purchases are recorded directly into the Merchandise Inventory account, which is an asset account. Therefore, the journal entry would include a debit to Merchandise Inventory. Since the purchase was made with cash, there would also be a credit to Cash, resulting in an increase in the Cash account. Hence, both options A and C are correct.

The Journal Entry to Record a Purchase of Inventory for Cash