Middleton Company uses the perpetual inventory system. The company purchased an item of inventory for $130 and sold the item to a customer for $200. How will the sale affect the company's Inventory account?

Question

Quizplus · Accepted Answer

Under the perpetual inventory system, the cost of goods sold is recorded at the time of sale, and the corresponding amount is deducted from the inventory account. Therefore, the sale of $200 will increase the company's revenue and decrease the inventory account by the amount of cost of goods sold, which is $130.

Middleton Company Uses the Perpetual Inventory System