Question

To record the sale of goods for cash in a perpetual inventory system:

(a) only one journal entry is necessary to record the receipt of cash and the sales revenue.
(b) only one journal entry in necessary to record the receipt of cash and the sales revenue.
(c) two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and reduction of inventory.
(d) two journal entries are necessary: one to record the receipt of cash and reduction of inventory, and one to record the cost if goods sold and sales revenue.

Answer 1

In a perpetual inventory system, two journal entries are needed to record the sale of goods for cash: one for the receipt of cash and sales revenue, and the other for the cost of goods sold and reduction of inventory.

Step-by-step explanation:

To record the sale of goods for cash in a perpetual inventory system, two journal entries are necessary. The correct answer is (c) two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and reduction of inventory.

The first entry would debit Cash and credit Sales Revenue. This journal entry recognizes the inflow of cash and the revenue generated from the sale. The second entry would debit Cost of Goods Sold (COGS) and credit Inventory to reflect the outflow of inventory and the associated cost that is transferred to COGS upon the sale of the goods.