Steelman Company purchased inventory on account. The inventory costs $2,000 and is expected to sell for $3,000. How should Steelman record the purchase using a periodic inventory system?
1. Purchases 2,000
Accounts Payable 2,000
2. Cost of Goods Sold 2,000
Deferred Revenue 1,000
Sales Revenue 3,000
3. Cost of Goods Sold 2,000
Accounts Payable 2,000
4. Cost of Goods Sold 2,000
Gain 1,000
Accounts Payable 3,000
A) Option 1
B) Option 2
C) Option 3
D) Option 4
Answer: A
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