ECONOMICS

Detailed explanation-1: -In a perpetual system, two journal entries are required when a business makes a sale: one to record the sale and one to record the cost of the sale. In the first journal entry, Marcia records the revenue from the sale, or the amount she earned from selling her products.

Detailed explanation-2: -Goods available for sale can be sold and then become cost of goods sold on the income statement. The journal entry for this transaction using a perpetual inventory system includes a debit to Cash of $1, 000 and a credit to Sales revenue of $1, 000; a debit to Cost of goods sold of $600 and a credit to Inventory of $600.

Detailed explanation-3: -Financial Accounting Option (d): Under the perpetual inventory system, at the end of the period, all the temporary accounts will be closed by transferring the balance to the profit and loss summary account. Therefore, the balance of the cost of goods sold is transferred to the profit and loss summary account.

Detailed explanation-4: -When the retailer sells the merchandise the Inventory account is credited and the Cost of Goods Sold account is debited for the cost of the goods sold. Rather than the Inventory account staying dormant as it did with the periodic method, the Inventory account balance is updated for every purchase and sale.