A company purchased inventory for $1,300 per unit.The company later sold one unit of the inventory for cash of $1,900.Under the perpetual inventory system,which accounts will be debited to record the sale?

Question

Quizplus · Accepted Answer

Under the perpetual inventory system, the cost of goods sold is debited when a sale is made. In this case, the company sold one unit of inventory for $1,900, but the cost of that unit was $1,300, so the account debited for cost of goods sold will be $1,300. The other account debited will be cash, for the amount received in the sale. Option A is incorrect because it only debits inventory, and the cost of goods sold is not recorded. Option C is incorrect because it debits only $600 for cost of goods sold, which is not the actual cost, and it does not account for the full $1,300 purchase price. Option D is incorrect because it debits inventory, which is not correct since the inventory has been sold already.

A Company Purchased Inventory for $1,300 Per Unit