Under the perpetual inventory system what is the correct entry for the credit purchase of 5 washing machines at $300 per washing machine plus GST of $30 each?
A) Debit Inventory $1,650; Credit Accounts payable $1,500, Credit GST $150
B) Debit Inventory $1,650; Credit Accounts payable $1,650
C) Debit Accounts payable $1,650; Credit Inventory $1,500, Credit GST $150
D) Debit Inventory $1,500, Debit GST $150; Credit Accounts payable $1,650

Question

Quizplus · Accepted Answer

The correct accounting entry is debit Inventory $1,500, debit GST $150; credit Accounts payable $1,650. The GST on the purchase is not part of the cost of inventory.

Under the Perpetual Inventory System What Is the Correct Entry