Grogan Company purchases inventory on account with a cost of $1,700 and a retail price of $3,400.Grogan Company uses the perpetual inventory method.What journal entry is required on the date of purchase?

Question

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Under the perpetual inventory method, inventory is debited when purchased. Therefore, the correct journal entry on the date of purchase would be to debit Inventory for $1,700 and credit Accounts Payable for $1,700. Option A is incorrect as it debits Purchases instead of Inventory. Option B is incorrect as there is no payment made in cash. Option D is incorrect as there is no mention of a sale or accounts receivable in the scenario.

Grogan Company Purchases Inventory on Account with a Cost of $1,700