Question

Question 142.5 pts

Using the perpetual inventory system, the purchase of merchandise on account would include a:

debit to Accounts Payable and a credit to Merchandise Inventory.

debit to Sales and a credit to Accounts Receivable.

debit to Merchandise Inventory and a credit to Accounts Payable.

debit to Merchandise Inventory and a credit to Sales.

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Question 152.5 pts

The return of merchandise to the supplier for credit using the perpetual inventory system would include a:

debit to Accounts Receivable and a credit to Accounts Payable.

debit to Sales Returns and Allowances and a credit to Merchandise Inventory.

debit to Accounts Payable and a credit to Purchases Returns and Allowances.

debit to Accounts Payable and a credit to Merchandise Inventory.

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Question 162.5 pts

The recording of the cost of freight-in under the perpetual inventory system would include a:

debit to Freight-In.

credit to Freight-In.

debit to Merchandise Inventory.

credit to Merchandise Inventory.

Question 19 2.5 pts

When using a perpetual inventory method, what account(s) must be updated when a sale is recognized?

Merchandise Inventory

Cost of Goods Sold

Both A and C are correct.

Supplies

Answer 1

• When using Perpetual method:

--All transactions related to Purchase , Purchase return and allowances, Freight In, Purchase Discount are adjusted through “Merchandise Inventory” Account.

--When Sales are made, Cost of Goods sold is adjusted after every sales transaction, along with Merchandise Inventory.

--Based on Above, following questions are answered.

• Question 14

Correct Answer: Option #3: debit to Merchandise Inventory and a credit to Accounts Payable.

• Question 15

Correct Answer: Option #4: debit to Accounts Payable and a credit to Merchandise Inventory.

• Question 16

Correct Answer: Option #3: debit to Merchandise Inventory

• Question 19

Correct Answer: Option #3: Both A and C are Correct = Both Merchandising Inventory and Cost of Goods Sold gets affected.