The Proper Journal Entry to Record the Receipt of Inventory

question 137

Multiple Choice

The proper journal entry to record the receipt of inventory purchased on account in a periodic inventory system would be:

• A) Jan 1 Inventory 450.00 Accounts Payable 450.00
• B) Jan 1 Office Supplies 450.00 Accounts Payable 450.00
• C) Jan 1 Purchases 450.00 Accounts Payable 450.00
• D) Jan 1 Purchases 450.00 Accounts Receivable 450.00

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Definitions:

Bad Debt Expense

This represents the estimate of non-collectible accounts receivable that occurs in a given period, reflecting potential losses due to credit sales.

Credit Sales

Sales transactions where the payment is delayed as opposed to immediate cash payment, generating accounts receivable.

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Allowance for Doubtful Accounts

A contra asset account that represents an estimate of the amount of accounts receivable that may not be collectible.