What journal entry is required when inventory is sold during the year under the perpetual inventory system?
A) Dr Cost of goods sold
$\mathrm { Cr }$ Inventory
B) Dr Cost of goods sold
$\mathrm { Cr }$ Inventory
Cr Purchases
C) $$\text { No Journal Entry is made }$$
D) Dr Purchases
$\mathrm { Cr }$ Accounts Payable

Question

Quizplus · Accepted Answer

Under the perpetual inventory system, inventory is continuously updated through purchases and sales. When inventory is sold, the cost of those goods needs to be recognized as an expense in the period that they were sold. Therefore, the entry would be to debit Cost of Goods Sold and credit Inventory. This recognizes the expense of the goods sold and reduces the quantity and value of the inventory remaining on hand.

What Journal Entry Is Required When Inventory Is Sold During Cr\mathrm { Cr }Cr

What Journal Entry Is Required When Inventory Is Sold During $\mathrm { Cr }$