Under the Perpetual Inventory System, What Is the Entry for the Credit

question 61

Multiple Choice

Under the perpetual inventory system, what is the entry for the credit purchase of 10 violins at $600 each plus 10% GST?

• A) DR Inventory $6600; CR Accounts payable $6000; CR GST payable $600
• B) DR Inventory $6000; DR GST receivable $600; CR Accounts payable $6600
• C) DR Inventory $6600; CR Accounts payable $6600
• D) DR Inventory $6000; CR Accounts payable $5400; CR GST payable $600

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Definitions:

Inventory Increase

A rise in the quantity or value of goods and materials that a company holds for the purpose of sale or production.

Investing Activities

Transactions involving the purchase or sale of long-term assets and investments, reflected in the cash flow statement.

Bonds Payable

Long-term liabilities representing money owed by a corporation or government to bondholders, to be repaid at a future date.

Receipts

Refers to the total amount of money received by a company during a specific period, often from sales of goods or services.