An electronics retailer purchases $20,000 of computers for resale. The retailer spends $500 in cash for transportation cost. Under a perpetual inventory system the journal entry to record the purchase will include:

Multiple Choice

• $20,000 will be debited to Inventory and $20,000 will be credited to Cash.

• $20,500 will be debited to Inventory, $20,000 will be credited to Accounts Payable, and $500 will be credited to Cash.

• $20,500 will be debited to costs of goods sold and $20,500 will be credited to Accounts Payable.

• $20,000 will be credited to Inventory and $20,000 will be credited to Purchases.