Owens Jewelers Uses the Perpetual Inventory System

question 127

Multiple Choice

Owens Jewelers uses the perpetual inventory system.On April 2,Owens sold merchandise with a cost of $5,500 for $7,000 to a customer on account with terms of 1/15,n/30.Which of the following journal entries correctly records the sales revenue?

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Definitions:

Inventory Flow

The progression of goods through a business, typically from purchase or production to sale, characterized by methods such as FIFO, LIFO, and weighted average.

Average Cost Method

A method of inventory valuation where the cost of goods sold and ending inventory are determined by calculating the weighted average of the costs of all items available for sale.

Year-End Inventory

The total counted value of inventory that a business owns at the end of its fiscal year, which is used to calculate cost of goods sold and profitability.

Weighted Average Cost

A method of calculating the cost of inventory based on the average cost of all similar goods available during a specific period.