The document provides examples of journal entries under both a periodic and perpetual inventory system for various common transactions involving the purchase and sale of inventory. It shows how inventory is tracked differently between the two systems when purchases are made, returns occur, sales are made, payments are received, and ending inventory is recorded. The examples are intended to illustrate the mechanics of recording inventory-related transactions under each system.
The document provides examples of journal entries under both a periodic and perpetual inventory system for various common transactions involving the purchase and sale of inventory. It shows how inventory is tracked differently between the two systems when purchases are made, returns occur, sales are made, payments are received, and ending inventory is recorded. The examples are intended to illustrate the mechanics of recording inventory-related transactions under each system.
Original Description:
accounting for merchandising business using the perpetual inventory system
The document provides examples of journal entries under both a periodic and perpetual inventory system for various common transactions involving the purchase and sale of inventory. It shows how inventory is tracked differently between the two systems when purchases are made, returns occur, sales are made, payments are received, and ending inventory is recorded. The examples are intended to illustrate the mechanics of recording inventory-related transactions under each system.
The document provides examples of journal entries under both a periodic and perpetual inventory system for various common transactions involving the purchase and sale of inventory. It shows how inventory is tracked differently between the two systems when purchases are made, returns occur, sales are made, payments are received, and ending inventory is recorded. The examples are intended to illustrate the mechanics of recording inventory-related transactions under each system.
Compared for P6,000; terms were 2/10,n/30. Periodic Inventory System When the periodic inventory method is used, all Purchases 6,000 purchases of merchandise are debited to the Accounts payable 6,000 purchases accounts. The purchase account, a temporary account, is used only for merchandise Perpetual Inventory System purchased for resale. Inventory 6,000 Accounts payable 6,000 Under the perpetual inventory system, the inventory account is increased by purchases, 5. Paid freight for the P6,000 purchase; terms transportation in and sales returns and is decreased were FOB Shipping point by the cost of sales, purchases returns and Periodic Inventory System allowance and purchase discounts. Freight in 200 Cash 200 1. Sold merchandise on account costing P8,000 for P10,000; terms were 2/10, n/30; Perpetual Inventory System Periodic Inventory System Inventory 200 Accounts Receivable 10,000 Cash 200 Sales 10,000 6. Returned merchandise costing P300 (part of the Perpetual Inventory System P6,000 purchase) Accounts Receivable 10,000 Periodic Inventory System Sales 10,000 Accounts payable 300 Purchase returns and allowance 300 Cost of Goods Sold 8,000 Inventory 8,000 Perpetual Inventory System Accounts payable 300 2. Customer returned merchandise costing P400 Inventory 300 that had been sold on account for P500 (part of the P10,000 sale) 7. Paid merchandise purchased, refer to no. 4 Periodic Inventory System Periodic Inventory System Sales returns and allowances 500 Accounts payable 5,700 Accounts receivable 500 Purchase discounts 114 Cash 5,586 Perpetual Inventory System Sales returns and allowances 500 Perpetual Inventory System Accounts receivable 500 Accounts payable 5,700 Inventory 114 Inventory 400 Cash 5,586 Cost of Goods Sold 400 8. To transfer the beginning inventory balance, 3. Received payment from customer for P250,000, to the Income Summary account. merchandise sold above. Periodic Inventory System Periodic Inventory System and Perpetual Income summary 250,000 Inventory System Inventory 250,000 Cash 9,310 Sales discounts 190 Perpetual Inventory System 1
Accounts receivable 9,500 - No entry
Page 9. To record the ending inventory balance, 24 Paid Y Trading in full. P231,500. 28 Received cash from Mr. Sebastian in full Periodic Inventory System payment of his account. Inventory 231,500 Income summary 231,500 Exercise 2 The following transactions were completed by Perpetual Inventory System Addicted Enterprises during the month of March - No entry 2019: 1 Purchased merchandise from Manila Trading 10. To adjust the ending perpetual inventory for P22,320, terms 2/10, n/30. balance for the shrinkage during the year. 2 Returned P570 worth of defective Periodic Inventory System merchandise to Manila Trading. - No entry 3 Sold merchandise on account to Armando for P10,710, terms 2/10, n/30. Perpetual Inventory System 4 Armando returned P960 worth of defective Cost of Goods Sold 360 merchandise. Inventory 360 5 Sold merchandise for cash to Bobby for P6,525. 6 Purchased office supplies on account from EXERCISES Makati Commercial for P9,675. 7 Returned P425 worth of defective supplies to Instruction: Give the complete journal entry Makati Commercial. for each transactions. 8 Sold merchandise for cash to Cora for P8,190. Exercise 1 9 Cora returned P290 worth of defective The Trapped Company engaged in the following merchandise. transactions during the month of June 2019: 10 Paid Manila Trading in full. 1 Purchased merchandise on account from X 11 Sold merchandise on account to Delia for Co. for P10,850. P14,260, terms 2/10, n/30. 2 Returned P520 worth of defective 12 Received cash from Armando in full merchandise to X Co. payment of his account. 5 Sold merchandise on account to Ms. Tere for 14 Purchased merchandise for cash from San P3,930. Juan Company for P20,700. 7 Sold merchandise for cash to Mr. Pangan for 15 Returned P2,450 worth of defective P2,135. merchandise to San Juan Company. 8 Mr. Pangan returned P185 worth of defective 20 Paid Makati Commercial in full. merchandise. 21 Received cash from Delia in full payment 9 Purchased office equipment on account from of her account. Y Trading for P16,200. 11 Paid X Corporation in full. 14 Sold merchandise on account to Mr. Sebastian for P5,040. 16 Mr. Sebastian returned P425 worth of defective merchandise. 18 Received cash from Mr. Tere in full payment of his account. 21 Purchase merchandise for cash from Z Company. 2