A Company Uses Perpetual Inventory in Connection with the Specific-Identification $$\begin{array} { | l | r | r | } \hline \text { Inventory } & 14,400 & \\\hline \text { Cost of goods sold } & & 14,400 \\\hline\end{array}$$

question 121

Multiple Choice

A company uses perpetual inventory in connection with the specific-identification method.The company purchased 30 industrial diamonds for $500 per unit.Later in the month,they purchased another 20 diamonds from another supplier for $480 per unit.On the last day of the month,they sold 18 diamonds to a customer at a price of $800 per unit.Of the 18 diamonds,3 came from the first batch and the remainder came from the second batch.
-Which of the following journal entries correctly records the Cost of goods sold?

• A) \[\begin{array} { | l | r | r | }
• \hline \text { Inventory } & 14,400 & \\
• \hline \text { Cost of goods sold } & & 14,400 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | r | r | }
• \hline \text { Sales revenue } & 14,400 & \\
• \hline \text { Inventory } & & 14,400 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Cost of goods sold } & 8,700 & \\
• \hline \text { Sales revenue } & & 8,700 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Cost of goods sold } & 8,700 & \\
• \hline \text { Inventory } & & 8,700 \\
• \hline
• \end{array}\]

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Definitions:

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase a stock, bond, commodity, or other asset at a specified price within a specific time frame.

Market Price

The current price at which a good or service can be bought or sold in the open market.

Strike Price

The specified price at which the holder of an option can buy or sell the underlying security.

Market Price

The current price at which an asset or service can be bought or sold in a marketplace, determined by supply and demand dynamics.