A Company Used a Perpetual Inventory System

question 58

Multiple Choice

A company used a perpetual inventory system. By physical count, ending Merchandise Inventory is $90,200. The balance in the Merchandise Inventory account is $93,700. The adjusting entry is

• A)debit to Income Summary, $3,500; credit Merchandise Inventory, $3,500.
• B)debit to Merchandise Inventory, $3,500; credit Income Summary, $3,500.
• C)debit to Cost of Goods Sold, $3,500; credit Merchandise Inventory, $3,500.
• D)debit to Income Summary, $3,500; credit Cost of Goods Sold, $3,500.
• E)debit to Merchandise Inventory, $3,500; credit Cost of Goods Sold, $3,500.

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Definitions:

Total Revenue

The overall amount of money generated from the sale of goods or services before any expenses are subtracted.

Output

The quantity of goods or services produced in a given time period.

Price Per Unit

The cost of a single unit of a product or service.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping.