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Homework answers / question archive / On Jan
On Jan.1, 2016 Mohammad Company purchased merchandise on account from XY Company for $25,000, terms 5/15, n/30. The Entry Should be recorded on Jan.1. 2016 by Mohammad Company using perpetual inventory system. Debit Inventory 25000, Credit Account Payable 25000. A Debit Account Receivable 25000. Credit Sales 25000. Debit Purchases 25000. Credit Cash 25000. o Debit Gash 25000. Credit Sales 25000.
Answer:A.Debit:Inventory 25000, Credit :Accounts Payable 25000
Since it is perpetual inventory system,the entry would be:
A.Debit:Inventory 25000, Credit :Accounts Payable 25000
B. would represent Sales on account
C. would represent Periodic Inventory system purchase
D.is an incorrect entry as credit sales is never received in cash
