On July 1,Darin Company sold inventory costing $4,500 to Dee Company for $6,000,terms 2/10,n/30.Both companies use a perpetual inventory system.What journal entry will be recorded by Dee Company on July 1?

Question

Quizplus · Accepted Answer

Dee Company purchased inventory from Darin Company, therefore, the journal entry for Dee Company will be a debit to Inventory and a credit to Accounts Payable for the amount of the purchase, which is $6,000. Option A is not correct because Dee Company did not purchase from purchases account, rather they purchased from Darin Company. Option B is incorrect because Dee Company is not selling the inventory to anyone at this time. Option D is incorrect because the cost of goods sold is recorded when inventory is sold, not when it is purchased.

On July 1,Darin Company Sold Inventory Costing $4,500 to Dee