Under the Periodic Inventory System, What Is the Correct Entry

question 37

Multiple Choice

Under the periodic inventory system, what is the correct entry to record the cost of the sale of 2 electric guitars sold to a customer at $550 per guitar including GST? (The guitars were originally purchased on credit at $250 each plus GST of $25 per guitar.)

• A) Debit purchases $1100; credit sales $1100
• B) Debit purchases $500; credit inventory $500
• C) Debit cost of sales $500; credit inventory $500
• D) The cost of each sale is not recorded under the periodic inventory system

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Definitions:

Tilde

The tilde is a character ( ~ ) used above a letter in some languages to denote a specific pronunciation and in mathematics to indicate equivalence or similarity.

Wedge

A simple tool with a tapered shape, used for splitting, lifting, or holding things apart.

Horseshoe

In logic, often symbolizes the material implication operator, indicating that if the first statement is true, then the second statement must also be true.

Triple Bar

A symbol (≡) used in logic to denote that two statements are logically equivalent.