4. XYZ Co. purchased $5,000 of inventory on account. Assuming that XYZ Co. uses

ID: 2428002 • Letter: 4

Question

4. XYZ Co. purchased $5,000 of inventory on account. Assuming that XYZ Co. uses the perpetual inventory method, which of the following entries would it make to record this transaction?

a. Debit purchases / credit accounts payable

b. Debit accounts payable / credit purchases

c. Debit accounts payable / credit inventory

d. Debit inventory / credit accounts payable

a. Debit purchases / credit accounts payable

b. Debit accounts payable / credit purchases

c. Debit accounts payable / credit inventory

d. Debit inventory / credit accounts payable

Explanation / Answer

In Perpetual Inventory method on account the correct entry for inventory purchases is Inventory Dr To Accounts Payable Hence the correct option is d. Debit Inventory/ Credit Accounts Payable

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4. XYZ Co. purchased $5,000 of inventory on account. Assuming that XYZ Co. uses

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