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