A Company That Uses the Perpetual Inventory System Purchased 500

question 112

Multiple Choice

A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $9,000 and paid $780 for the freight-in.The company sold the whole lot to a supermarket chain for $12,000 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) \[\begin{array} { | c | r | r | }
• \hline \text { Cost of Goods Sold } & 9,780 & \\
• \hline \text { Merchandise Inventory } & & 9,780 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | r | r | }
• \hline \text { Merchandise Inventory } & 9,780 & \\
• \hline \text { Cost of Goods Sold } & & 9,780 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Cost of Goods Sold } & 9,000 & \\
• \hline \text { Sales Revenue } & & 9,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Cost of Goods Sold } & 9,000 & \\
• \hline \text { Merchandise Inventory } & & 9,000 \\
• \hline
• \end{array}\]

---

Definitions:

Composition

In mathematics, the composition of functions refers to the application of one function to the results of another.

Function

A relation or correspondence between two sets in which each element of the first set is paired with exactly one element of the second set, typically described by f(x).

Function

A relation between a set of inputs and allowable outputs, where each input is related to exactly one output.

Compounded Interest

Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan.