World of Sound is a small retail business that specializes in the sale of top-of-the-line sound systems. This year, the store has begun to carry the Surround Sound manufactured by Carp Co. Thus far, World of Sound has recorded the following transactions involving the Surround Sound
5 May Purchased 18 units at a unit cost of $2,400
18 May Purchased 15 additional units at $2,550 each
12 June Sold 19 units to the Davies Theater

-If World of Sound uses a perpetual inventory system, the journal entry to record the sale on 12th February would include which of the following?

Question

World of Sound is a small retail business that specializes in the sale of top-of-the-line sound systems. This year, the store has begun to carry the Surround Sound manufactured by Carp Co. Thus far, World of Sound has recorded the following transactions involving the Surround Sound
5 May Purchased 18 units at a unit cost of $2,400
18 May Purchased 15 additional units at $2,550 each
12 June Sold 19 units to the Davies Theater

-If World of Sound uses a perpetual inventory system, the journal entry to record the sale on 12th February would include which of the following?

Quizplus · Accepted Answer

If World of Sound uses a perpetual inventory system, the cost of goods sold is debited at the time of sale for the cost of the goods sold. Therefore, the journal entry should include a debit to the Cost of Goods Sold for $45,750. Option B is incorrect because it suggests a credit to Cost of Goods Sold, which is incorrect. Option C is incorrect because it suggests a credit to purchases which has already been recorded earlier. Option D is also incorrect because it suggests a debit to inventory that would increase the inventory value instead of reducing it.

World of Sound Is a Small Retail Business That Specializes