The journal entry to record the purchase of merchandise on credit,under the perpetual inventory system is:

Question

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Under the perpetual inventory system, merchandise purchased on credit is recorded by debiting Inventory (asset account) and crediting Accounts Payable (liability account). This transaction increases the inventory balance and creates a liability for the business to pay the supplier in the future. Option A is incorrect as it debits Purchases instead of Inventory. Option B is incorrect as it decreases the inventory and increase cost of goods sold, which is not appropriate for a purchase. Option D is incorrect as it debits Purchase instead of Inventory.

The Journal Entry to Record the Purchase of Merchandise on Credit,under