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

question 71

Multiple Choice

A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $10,000 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) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts Receivable } & 13,000 & \\
• \hline \text { Sales Revenue } & & 13,000 \\
• \hline
• \end{array}\]
• \[\begin{array} { | c | r | r | }
• \hline \text { Cost of Goods Sold } & 10,950 & \\
• \hline \text { Merchandise Inventory } & & 10,950 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | r | r | }
• \hline \text { Merchandise Inventory } & 13,000 & \\
• \hline \text { Cost of Goods Sold } & & 13,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Cost of Goods Sold } & 13,000 & \\
• \hline \text { Sales Revenue } & & 13,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts Receivable } & 13,000 & \\
• \hline \text { Sales Revenue } & & 13,000 \\
• \hline
• \end{array}\]
• \[\begin{array} { | c | r | r | }
• \hline \text { Cost of Goods Sold } & 10,000 & \\
• \hline \text { Merchandise Inventory } & & 10,000 \\
• \hline
• \end{array}\]

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Definitions:

Overconfidence Effect

A psychological tendency where a person's personal assurance in their decisions exceeds the actual correctness of those decisions.

Prospect Theory

A behavioral economic theory that describes the way people choose between probabilistic alternatives that involve risk, where the probability of outcomes is uncertain.

Behavioral Economists

Economists who study the effects of psychological, cognitive, emotional, cultural, and social factors on economic decisions of individuals and institutions.

Availability Heuristic

A cognitive bias where people make judgments about the likelihood of an event based on how easily examples come to mind.