Under the periodic inventory approach an appropriate journal entry to measure closing inventory is:
A) DR Opening inventory (cost of goods sold expense) CR Inventory (asset);
B) DR Purchases (expense) CR Inventory (asset);
C) DR Inventory (asset) CR Closing inventory (cost of goods sold expense);
D) DR Purchases returns (cost of goods sold expense) CR Inventory (asset).

Question

Quizplus · Accepted Answer

The appropriate journal entry to measure closing inventory under the periodic inventory approach is to debit Inventory (asset) and credit Closing inventory (cost of goods sold expense). This records the value of the inventory on hand at the end of the accounting period and also reduces the cost of goods sold expense by the amount of inventory not sold. Option A would be used to record the opening inventory at the beginning of the period. Option B would be used to record the purchases made during the period. Option D would be used to record the returns of goods to the supplier.

Under the Periodic Inventory Approach an Appropriate Journal Entry to Measure