A Company That Uses the Perpetual Inventory System Sold Goods $$\begin{array} { | c | r | r | } \hline \text { Cost of Goods Sold } & 4,200 & \\\hline \text { Sales Revenue } & & 4,200 \\\hline\end{array}$$

question 37

Multiple Choice

A company that uses the perpetual inventory system sold goods to a customer for cash for $4,200. The cost of the goods sold was $1,000. Which of the following journal entries correctly records this transaction?

• A) \[\begin{array} { | c | r | r | }
• \hline \text { Cost of Goods Sold } & 4,200 & \\
• \hline \text { Sales Revenue } & & 4,200 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 4,200 & \\
• \hline \text { Sales Revenue } & & 4,200 \\
• \hline
• \end{array}\]
• \[\begin{array} { | c | r | r | }
• \hline \text { Cost of Goods Sold } & 1,000 & \\
• \hline \text { Merchandise Inventory } & & 1,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts Receivable } & 4,200 & \\
• \hline \text { Cash } & & 4,200 \\
• \hline
• \end{array}\]
• \[\begin{array} { | c | r | r | }
• \hline \text { Cost of Goods Sold } & 1,000 & \\
• \hline \text { Merchandise Inventory } & & 1,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Merchandise Inventory } & 4,200 & \\
• \hline \text { Sales Revenue } & & 4,200 \\
• \hline
• \end{array}\]

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Definitions:

Codicil

A written supplement or modification to a will. A codicil must be executed with the same formalities as a will.

Per Capita

A statistical measure that divides an aggregate amount by the number of units or individuals to determine the average amount per person.

Lineal Heirs

Direct descendants of an individual, such as children, grandchildren, and so forth, who may inherit from an estate.

Collateral Heirs

Individuals entitled to inherit a deceased person's estate in the absence of direct descendants or other primary beneficiaries, often including distant relatives.