contestada

James Company began the month of October with inventory of $15,000. The following inventory transactions occurred during the month:The company purchased merchandise on account for $22,000 on October 12, 2018. Terms of the purchase were 2/10, n/30. James uses the net method to record purchases. The merchandise was shipped f.o.b. shipping point and freight charges of $500 were paid in cash.On October 31, James paid for the merchandise purchased on October 12.During October, merchandise costing $18,000 was sold on account for $28,000.It was determined that inventory on hand at the end of October cost $19,060.Required:1. Assuming that the James Company uses a periodic inventory system, prepare journal entries for the above transactions including the adjusting entry at the end of October to record cost of goods sold.2. Assuming that the James Company uses a perpetual inventory system, prepare journal entries for the above transactions.

Respuesta :

Answer:

(a)

Under net method:

Purchase discount = Gross purchases × Purchase discount rate

                               = 22,000 × 2%

                               = $440

Net purchases = Gross purchases - Purchase discount

                        =  $22,000 - $440

                        = $21,560

The journal entry under periodic inventory system is as follows:

OCT 12

Freight-in A/c     Dr.       $500

To cash                                      $500

(To record freight-in charges)

OCT 31

Accounts payable  A/c     Dr.       $21,560

Interest expense A/c        Dr.       $440

To cash                                                      $22,000

(To record payment made to suppliers)

OCT 16

Accounts receivable  A/c     Dr.       $28,000

To sales revenue                                                     $28,000

(To record sales on account)

The journal entry under perpetual inventory system is as follows:

OCT 31

Merchandising Inventory (ending) A/c      Dr.  19,060

Cost of goods sold A/c                               Dr.  18,000

To beginning inventory                                                    15,000

To purchases                                                                     21,560

To freight-in                                                                         500

(To record cost of goods sold)

Oct 12

Merchandising Inventory     Dr.       $21,560

To Accounts payable                                     $21,560

(To record purchase of inventory on account)

Merchandising Inventory     Dr.       $500

To cash                                                         $500

(To record purchase of inventory on account)

Year-end adjusting entry : No journal entry is required.

anthougo

1. Assuming that the James Company uses a periodic inventory system, the preparation of the journal entries for the transactions, including the adjusting entry at the end of October to record the cost of goods sold is as follows:

Periodic Inventory System:

Oct. 12 Debit Purchases $22,000

Credit Accounts Payable $21,560

Credit Cash Discounts $440

The terms of the purchase were 2/10, n/30.

Debit Freight-in $500

Credit Cash $500

Oct. 31 Debit Accounts Payable $21,560

Debit Cash Discounts $440

Credit Cash $22,000

Debit Accounts Receivable $28,000

Credit Sales Revenue $28,000

The determination of the cost of goods sold under the periodic inventory system is as follows:

Cost of goods sold:

Beginning inventory of $15,000

Purchases                   22,000

Goods available       $37,000

Ending inventory      $19,060

Cost of goods sold  $17,940

2. Assuming that the James Company uses a perpetual inventory system, the preparation of the journal entries for the transactions, including the adjusting entry at the end of October to record the cost of goods sold is as follows:

Perpetual Inventory System:

Oct. 12 Debit Inventory $22,000

Credit Accounts Payable $21,560

Credit Cash Discounts $440

  • The terms of the purchase were 2/10, n/30.

Debit Freight-in $500

Credit Cash $500

Oct. 31 Debit Accounts Payable $21,560

Debit Cash Discounts $440

Credit Cash $22,000

Debit Accounts Receivable $28,000

Credit Sales Revenue $28,000

Debit Cost of good sold $18,000

Credit Inventory $18,000

Debit Inventory $60

Credit Cost of goods sold $60

What is the difference between periodic and perpetual inventory systems?

The periodic inventory system records inventory transactions at the end of the financial period while the perpetual inventory system records inventory transactions as they occur.

Under the periodic inventory system, the purchases account is debited for the purchase of inventory instead of the inventory account under the perpetual inventory system.

The cost of goods sold is determined at the end of the period under the periodic inventory system and it is not journalized, unlike under the perpetual inventory system, where it is recorded per transaction.

Transaction Analysis:

Beginning inventory = $15,000

Periodic Inventory System:

Oct. 12 Purchases $22,000 Accounts Payable $21,560 Cash Discounts $440

The terms of the purchase were 2/10, n/30.

Freight-in $500 Cash $500

Oct. 31 Accounts Payable $21,560 Cash Discounts $440 Cash $22,000

Accounts Receivable $28,000 Sales Revenue $28,000

Perpetual Inventory System:

Oct. 12 Inventory $22,000 Accounts Payable $21,560 Cash Discounts $440

The terms of the purchase were 2/10, n/30.

Freight-in $500 Cash $500

Oct. 31 Accounts Payable $21,560 Cash Discounts $440 Cash $22,000

Accounts Receivable $28,000 Sales Revenue $28,000

Cost of good sold $18,000 Inventory $18,000

Inventory $60 Cost of goods sold $60

Learn more about recording journal entries at https://brainly.com/question/14279491

Otras preguntas

Q&A Education