A Company That Uses the Perpetual Inventory System Purchased 500

question 172

Multiple Choice

A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $9,000 and paid $790 for the freight-in. The company sold the whole lot to a supermarket chain for $13,000 on account. The company uses the specific-identification method of inventory costing. Which of the following entries correctly records the cost of goods sold?

• A) \[\begin{array} { | c | r | r | }
• \hline \text { Cost of Goods Sold } & 9,790 & \\
• \hline \text { Merchandise Inventory } & & 9,790 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | r | r | }
• \hline \text { Merchandise Inventory } & 9,790 & \\
• \hline \text { Cost of Goods Sold } & & 9,790 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Cost of Goods Sold } & 9,000 & \\
• \hline \text { Sales Revenue } & & 9,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Cost of Goods Sold } & 9,000 & \\
• \hline \text { Merchandise Inventory } & & 9,000 \\
• \hline
• \end{array}\]

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Definitions:

Add

In context, add might not be a specific key term without further context; it typically means to combine or sum quantities in mathematics.

Assumption

Something presumed to be true or certain to occur, even without evidence.

Simp

A slang term often used colloquially to describe someone who performs excessive sympathy and attention toward another person, sometimes in pursuit of a romantic relationship, typically perceived as not reciprocated or appreciated to the same extent.

Taut

An expression or statement that is redundantly repetitive or circular in its reasoning, effectively always true.