Pharoah company buys merchandise on account from Shamrock company. The selling price of the goods is $1385, and the cost of the goods sold is $650. Both companies use perpetual inventory systems. What is the initial journal entry for Pharoah company when purchasing the merchandise from Shamrock company?
a) Debit Accounts Payable $1385, Credit Inventory $1385
b) Debit Inventory $1385, Credit Accounts Payable $1385
c) Debit Cost of Goods Sold $650, Credit Accounts Receivable $1385
d) Debit Cash $1385, Credit Sales Revenue $1385