If a company were using a perpetual inventory system, which of the following entries is the correct journal entry to record the purchase of $20,000 of merchandise on account?
a)
$\begin{array}{|c|c|c|}
\hline \text { Dr. Inventory } & 20,000 & \
\hline \text { Cr. Accounts payable } & & 20,000 \\hline\end{array}$

b)
$\begin{array}{|c|c|c|}\hline \text { Dr. Inventory } & 20,000 & \
\hline \text { Cr. Purchases } & & 20,000 \\hline\end{array}$

d)
$\begin{array}{|c|c|c|}\hline \text { Dr. Purchases } & 20,000 & \
\hline \text { Cr. Inventory } & & 20,000 \\hline\end{array}$

d)
$\begin{array}{|c|c|c|}\hline \text { Dr. Purchases } & 20,000 & \
\hline \text { Cr. Accounts payable } & & 20,00 \
\hline
\end{array}$
A) Choice A
B) Choice B
C) Choice C
D) Choice D

Question

If a company were using a perpetual inventory system, which of the following entries is the correct journal entry to record the purchase of $20,000 of merchandise on account? 
a)
$\begin{array}{|c|c|c|}
\hline \text { Dr. Inventory } & 20,000 & \
\hline \text { Cr. Accounts payable } & & 20,000 \\hline\end{array}$

b)
$\begin{array}{|c|c|c|}\hline \text { Dr. Inventory } & 20,000 & \
\hline \text { Cr. Purchases } & & 20,000 \\hline\end{array}$

d)
$\begin{array}{|c|c|c|}\hline \text { Dr. Purchases } & 20,000 & \
\hline \text { Cr. Inventory } & & 20,000 \\hline\end{array}$

d)
$\begin{array}{|c|c|c|}\hline \text { Dr. Purchases } & 20,000 & \
\hline \text { Cr. Accounts payable } & & 20,00 \
\hline
\end{array}$
A) Choice A
B) Choice B
C) Choice C
D) Choice D

Quizplus · Accepted Answer

In a perpetual inventory system, purchases of merchandise are directly recorded in the Inventory account. The correct entry to record a purchase of merchandise on account (meaning the purchase is made on credit) is to debit Inventory for the amount of the purchase and credit Accounts Payable, reflecting the liability to pay for the merchandise.