Under the Perpetual Inventory System What Is the Correct Entry

question 26

Multiple Choice

Under the perpetual inventory system what is the correct entry to record the cost of the sale of 2 reclining chairs sold to a customer at $1100 per chair including GST? The items were originally purchased on credit at $500 each plus GST of $50 per chair.

• A) Debit cost of sales $2200; credit sales $2200
• B) Debit cost of sales $1000; debit GST outlays $100; credit inventory $1100
• C) Debit cost of sales $2000; credit inventory $2000
• D) Debit cost of sales $1000; credit inventory $1000

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Definitions:

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