A merchandiser purchased inventory on account for $10,000. Under the periodic inventory system, the journal entry to record purchases would include:
A)a debit to Purchases for $10,000 and a credit to Accounts Payable for $10,000.
B)a debit to Accounts Payable for $10,000 and a credit to Purchases for $10,000.
C)a debit to Merchandise Inventory for $10,000 and a credit to Accounts Payable for $10,000.
D)a debit to Accounts Payable for $10,000 and a credit to Merchandise Inventory for $10,000.

Question

Quizplus · Accepted Answer

Under the periodic inventory system, purchases are recorded in a Purchases account. When a merchandiser purchases inventory on account, it is recorded as a debit to the Purchases account, increasing the amount of inventory bought, and a credit to the Accounts Payable account, showing the amount owed to the vendor. Therefore, the correct journal entry to record purchases under the periodic inventory system is a debit to Purchases for $10,000 and a credit to Accounts Payable for $10,000. Option A is the only option that follows this logic.

A Merchandiser Purchased Inventory on Account for $10,000