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    Chapter 5 - Perpetual Vs Periodic System

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    kanya
    1) The document describes the accounting process for inventory under both a perpetual and periodic inventory system. 2) Under a perpetual system, inventory accounts are updated with each transaction such as purchases, sales, returns, and allowances. 3) Under a periodic system, inventory accounts are only updated at the end of an accounting period during a physical inventory count.

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    Chapter 5 - Perpetual Vs Periodic System

    Uploaded by

    kanya
    465 views4 pages
    1) The document describes the accounting process for inventory under both a perpetual and periodic inventory system. 2) Under a perpetual system, inventory accounts are updated with each transaction such as purchases, sales, returns, and allowances. 3) Under a periodic system, inventory accounts are only updated at the end of an accounting period during a physical inventory count.

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    Chapter 5 - Perpetual vs Periodic System (3)

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    1) The document describes the accounting process for inventory under both a perpetual and periodic inventory system. 2) Under a perpetual system, inventory accounts are updated with each transaction such as purchases, sales, returns, and allowances. 3) Under a periodic system, inventory accounts are only updated at the end of an accounting period during a physical inventory count.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    465 views4 pages

    Chapter 5 - Perpetual Vs Periodic System

    Uploaded by

    kanya
    1) The document describes the accounting process for inventory under both a perpetual and periodic inventory system. 2) Under a perpetual system, inventory accounts are updated with each transaction such as purchases, sales, returns, and allowances. 3) Under a periodic system, inventory accounts are only updated at the end of an accounting period during a physical inventory count.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 4

    CHAPTER 5: ACCOUNTING FOR MERCHADISING OPERATIONS ACCT 131 ACCOUNTING PRINCIPLES I

    PERPETUAL INVENTORY SYSTEM PERIODIC INVENTORY SYSTEM

    A. PURCHASE A. PURCHASE
    1. Purchase Inventories: 1. Purchase Inventories:
    Inventory Dr Purchases Dr
    Accounts Payable/Cash Cr Accounts Payable/Cash Cr

    2. Freight in (Transportation) cost: 2. Freight in (Transportation) cost:


    Inventory Dr Freight in Dr
    Accounts Payable/Cash Cr Accounts Payable/Cash Cr

    3. Purchase Returns and Allowances: 3. Purchase Returns and Allowances:


    Accounts Payable Dr Accounts Payable Dr
    Inventory Cr Purchase Returns and Allowances Cr

    4. Pay for inventory on acct and get a purchase discounts: 4. Pay for inventory on acct and get a purchase discounts:
    Accounts Payable Dr Accounts Payable Dr
    Inventory Cr Purchase Discounts Cr
    Cash Cr Cash Cr
    PERPETUAL INVENTORY SYSTEM PERIODIC INVENTORY SYSTEM

    B. SALES OF INVENTORY: B. SALES OF INVENTORY:

    1. Sales of inventories: 1. Sales of inventories:


    Cash/Accounts Receivable Dr Cash/Accounts Receivable Dr
    Sales Revenue Cr Sales Revenue Cr
    Cost of goods sold Dr
    Inventory Cr

    2. Sales Returns and Allowances: 2. Sales Returns and Allowances:


    Sales Returns and Allowances Dr Sales Returns and Allowances Dr
    Accounts Receivable Cr Accounts Receivable Cr
    Inventory Dr
    Cost of goods sold Cr

    3. Sales Discounts: 3. Sales Discounts:


    Cash Dr Cash Dr
    Sales Discounts Dr Sales Discounts Dr
    Accounts Receivable Cr Accounts Receivable Cr

    4. Frieght out cost: 4. Frieght out cost:


    Frieght out (Delivery expense) Dr Frieght out (Delivery expense) Dr
    Accounts Payable/Cash Cr Accounts Payable/Cash Cr
    Transaction PERPETUAL INVENTORY SYSTEM
    May 3. Purchased $40,000 of Inventory 40,000
    inventories on account, terms Accounts Payable 40,000
    2/10, n/30.

    May 6. Returned inventory Accounts Payable 5,000


    purchased on account on May 3., Inventory 5,000
    amount of $5,000

    May 12. Paid for the purchase on Accounts Payable 35,000


    May 3., less return of $5,000 and Inventory 700
    discounts of $3,500 Cash 34,300

    Accounts Receivable 20,000


    May 15. Sold inventories on
    account, $20,000, 1/10, n/30. The Sales Revenue 20,000
    cost of the inventories sold was Cost of goods sold 15,000
    $15,000 Inventory 15,000

    May 18. Received $4,000


    inventories returned from Sales Returns and Allowances 4,000
    customers who had transaction Accounts Receivable 4,000
    on May 15. The cost of
    inventories returned was $3,000. Inventory 3,000
    Cost of goods sold 3,000

    May 25. Received $15,680 as Cash 15,680


    payment on account from May Sales Discounts 320
    15 sale less return of May 18 and Accounts Receivable 16,000
    less discount of $320 (2% x
    (20,000-4,000)

    May 28. Purchased inventories Inventory 15,500


    on account, $15,000 with $500 Accounts Payable 15,500
    freight-in cost

    May 30. Received $19,600 from Cash 19,600


    cash sale. The cost of the Sales Revenue 19,600
    inventories sold was $13,800. Cost of goods sold 13,800
    Inventory 13,800
    PERIODIC INVENTORY SYSTEM
    Purchases 40,000
    Accounts Payable/Cash 40,000

    Accounts Payable 5,000


    Purchase Returns and Allowances 5,000

    Accounts Payable 35,000


    Purchase Discounts 700
    Cash 34,300

    Accounts Receivable 20,000


    Sales Revenue 20,000

    Sales Returns and Allowances 4,000


    Accounts Receivable 4,000

    Cash 15,680
    Sales Discounts 320
    Accounts Receivable 16,000

    Purchases 15,000
    Freight in 500
    Accounts Payable 15,500

    Cash 19,600
    Sales Revenue 19,600

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