A Company That Uses the Perpetual Inventory System Purchased 500 $$\begin{array} { | c | l | l | } \hline \text { Accounts receivable } & 13,000 & \\\hline \text { Sales revenue } & & 13,000 \\\hline\end{array}$$

question 5

Multiple Choice

A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $7000 and paid $950 for the freight-in.The company sold the whole lot to a supermarket chain for $13,000 on account.Which of the following entries correctly records the sale?

• A) \[\begin{array} { | c | l | l | }
• \hline \text { Accounts receivable } & 13,000 & \\
• \hline \text { Sales revenue } & & 13,000 \\
• \hline
• \end{array}\]
• \[\begin{array} { | c | l | l | }
• \hline \text { Cost of sales } & 7950 & \\
• \hline \text { Inventory } & & 7950 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | l | l | }
• \hline \text { Sales revenue } & 13,000 & \\
• \hline \text { Inventory } & & 13,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | l | l | }
• \hline \text { Cost of sales } & 13,000 & \\
• \hline \text { Sales revenue } & & 13,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | l | l | }
• \hline \text { Inventory } & 13,000 & \\
• \hline \text { Cost of sales } & & 13,000 \\
• \hline
• \end{array}\]

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Definitions:

Dividends Paid

The portion of a company's earnings that is distributed to its shareholders as a return on their investment.

Investment Account

An account held at a financial institution which allows an individual to deposit funds and make investments in securities and other assets.

Debit/Credit

Fundamental aspects of all accounting transactions, where debits are entries on the left side, and credits are entries on the right side, used to record business transactions in the ledger.

Dividend

Money dispensed by a corporation to its owners/shareholders, generally from the company's earnings.