Allay Company purchased $6,500 of merchandise inventory on account. Which of the following entries would be required to record this transaction?
A) Dr. Accounts Payable 6,500 Cr. Purchases 6,500
B) Dr. Inventory 6,500 Cr. Accounts Payable 6,500
C) Dr. Cost of Goods Sold 6,500 Cr. Accounts Payable 6,500
D) Cr. Accounts Payable 6,500 Cr. Inventory 6,500

Question

Quizplus · Accepted Answer

When a company purchases merchandise inventory on account, the inventory account is increased (debited) and the accounts payable account is also increased (credited). Therefore, the correct entry would be:
Dr. Inventory 6,500 
Cr. Accounts Payable 6,500

Allay Company Purchased $6,500 of Merchandise Inventory on Account