Under the Perpetual Inventory System, the Journal Entries to Record

question 88

Multiple Choice

Under the perpetual inventory system, the journal entries to record sales returns(the original sale was on account) would be:

• A) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts Payable } & X X & \\
• \hline \text { Merchandise Inventory } & & X X \\
• \hline & & \\
• \hline \text { Merchandise Inventory } &X X & \\
• \hline \text { Cost of Goods Sold } & & X X \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | r | r | }
• \hline \text { Cost of Goods Sold } & XX & \\
• \hline \text { Merchandise Inventory } & & XX \\
• \hline & & \\
• \hline \text { Merchandise Inventory } & XX & \\
• \hline \text { Accounts Payable } & & X X \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts Receivable} & XX & \\
• \hline \text { Sales } & & XX \\
• \hline & & \\
• \hline \text {Sales } & XX & \\
• \hline \text {Cost of Goods Sold. } & & X X \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Sales Returns and Allowances } &X X & \\
• \hline \text { Accounts Receivable } & & X X \\
• \hline & & \\
• \hline \text { Merchandise Inventory } & XX & \\
• \hline \text { Cost of Goods Sold } & & X X \\
• \hline
• \end{array}\]

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Definitions:

Source Of Cash

The origin of funds that a company or individual has, which could be operational earnings, investment returns, or financing.

Merchandise Sale

A commercial transaction where goods are sold to consumers.

Long-Term Debt

Long-term debt is loans and financial obligations lasting more than one year, often used for business expansion or large capital investments.

Stock Repurchase

A stock repurchase is when a company buys back its own shares from the marketplace, often to increase the value of remaining shares.