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    Merchandising Handout - Perpetual Vs Periodic

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    Tine
    This document compares and contrasts periodic and perpetual inventory systems for a merchandising business. Under the periodic system, inventory amounts are only updated after a physical count, while the perpetual system maintains continuous inventory records with each transaction. The document provides journal entries for 7 transactions including sales, returns, payments from customers, purchases, freight costs, purchase returns, and payments to suppliers. It shows the different journal entries required under each inventory system to record the transactions.

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    Merchandising Handout - Perpetual Vs Periodic

    Uploaded by

    Tine
    65 views1 page
    This document compares and contrasts periodic and perpetual inventory systems for a merchandising business. Under the periodic system, inventory amounts are only updated after a physical count, while the perpetual system maintains continuous inventory records with each transaction. The document provides journal entries for 7 transactions including sales, returns, payments from customers, purchases, freight costs, purchase returns, and payments to suppliers. It shows the different journal entries required under each inventory system to record the transactions.

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    Merchandising Handout - Perpetual vs Periodic (1)

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    This document compares and contrasts periodic and perpetual inventory systems for a merchandising business. Under the periodic system, inventory amounts are only updated after a physical count, while the perpetual system maintains continuous inventory records with each transaction. The document provides journal entries for 7 transactions including sales, returns, payments from customers, purchases, freight costs, purchase returns, and payments to suppliers. It shows the different journal entries required under each inventory system to record the transactions.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    65 views1 page

    Merchandising Handout - Perpetual Vs Periodic

    Uploaded by

    Tine
    This document compares and contrasts periodic and perpetual inventory systems for a merchandising business. Under the periodic system, inventory amounts are only updated after a physical count, while the perpetual system maintains continuous inventory records with each transaction. The document provides journal entries for 7 transactions including sales, returns, payments from customers, purchases, freight costs, purchase returns, and payments to suppliers. It shows the different journal entries required under each inventory system to record the transactions.

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    © All Rights Reserved
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    Financial Accounting and Reporting

    Institute of Accounts Business and Finance


    Merchandising Operations

    Periodic Inventory System Perpetual Inventory System

    1 Sold merchandise on account costing P8,000 for P10,000; terms were 2/10, n/30

    Accounts Receivable P10,000 Accounts Receivable 10,000


    Sales P10,000 Sales 10,000

    Cost of Sales 8,000


    Merchandise Inventory 8,000

    2 Customer returned merchandise costing P400 that had been sold on account which is part of the P10,000 sale

    Sales Returns and Allowances 500 Sales Returns and Allowances 500
    Accounts Receivable 500 Accounts Receivable 500
    (P10,000*400/8,000)
    Merchandise Inventory 400
    Cost of Sales 400

    3 Received payment from customer for the merchandise sold above. Cash Discount taken.
    P10,000 sale minus P500 return x 2% discount = P190

    Cash 9,310 Cash 9,310


    Sales Discount 190 Sales Discount 190
    Accounts Receivable 9,500 Accounts Receivable 9,500

    4 Purchased on account merchandise for resale for P6,000; terms were 2/10 n/30.

    Purchases 6,000 Merchandise Inventory 6,000


    Accounts Payable 6,000 Accounts Payable 6,000

    5 Paid P200 freight on the P6,000 purchase; terms were FOB shipping point, freight collect

    Freight In 200 Merchandise Inventory 200


    Cash 200 Cash 200

    6 Returned merchandise costing P300 which is part of the P6,000 purchase

    Accounts Payable 300 Accounts Payable 300


    Purchase Returns and Allowances 300 Merchandise Inventory 300

    7 Paid for merchandise purchased, cash discount taken


    P6,000 minus P300 return x 2% discount = P114

    Accounts Payable 5,700 Accounts Payable 5,700


    Purchase Discounts 114 Merchandise Inventory 114
    Cash 5,586 Cash 5,586

    Marjorie Anne U. Baladad, CPA

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