Under the periodic inventory system, the value of closing inventory determined by a physical count at year-end must be brought into the double-entry records. What is the correct year-end journal entry to achieve this?

Correct answer: C) Debit Inventory, Credit Cost of Sales

Explanation

To recognize closing stock under the periodic system, you debit the Inventory asset account (to put the asset on the statement of financial position) and credit Cost of Sales (to deduct it from the cost of goods sold in the profit or loss statement).