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    Chapter 10 - Problem 2

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    Christy Habel
    The document compares a perpetual inventory system to a periodic inventory system. The perpetual system makes journal entries at the time of each transaction to track inventory levels. The periodic system only makes entries periodically to record the cost of goods sold. It shows journal entries under each system for purchases, freight costs, returns, sales, and sales returns. It then provides a numerical example comparing the calculation of cost of goods sold under each method.

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    Chapter 10 - Problem 2

    Uploaded by

    Christy Habel
    136 views5 pages
    The document compares a perpetual inventory system to a periodic inventory system. The perpetual system makes journal entries at the time of each transaction to track inventory levels. The periodic system only makes entries periodically to record the cost of goods sold. It shows journal entries under each system for purchases, freight costs, returns, sales, and sales returns. It then provides a numerical example comparing the calculation of cost of goods sold under each method.

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    The document compares a perpetual inventory system to a periodic inventory system. The perpetual system makes journal entries at the time of each transaction to track inventory levels. The periodic system only makes entries periodically to record the cost of goods sold. It shows journal entries under each system for purchases, freight costs, returns, sales, and sales returns. It then provides a numerical example comparing the calculation of cost of goods sold under each method.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    136 views5 pages

    Chapter 10 - Problem 2

    Uploaded by

    Christy Habel
    The document compares a perpetual inventory system to a periodic inventory system. The perpetual system makes journal entries at the time of each transaction to track inventory levels. The periodic system only makes entries periodically to record the cost of goods sold. It shows journal entries under each system for purchases, freight costs, returns, sales, and sales returns. It then provides a numerical example comparing the calculation of cost of goods sold under each method.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 5

    Perpetual Inventory System

    Date Particulars
    Jan. 1, 20x1
    i. Inventory
    Accounts Payable
    To record the acquisition of goods on account.

    ii. Inventory
    Cash
    To record freight costs incurred on purchases.

    iii. Accounts Payable


    Inventory
    To record purchase returns.

    iv. Accounts Receivable


    Sales

    Cost of goods sold


    Inventory
    To record sales on account.

    v. Sales returns and allowances


    Accounts Receivable

    Inventory
    Cost of goods sold
    To record sales returns.
    Periodic Inventory System
    Particulars Acct. No. Debit Credit

    Purchases 130,000
    Accounts Payable 130,000
    ds on account.

    Freight-in 5,000
    Cash 5,000
    on purchases.

    Accounts Payable 3,000


    Purchase returns 3,000

    Accounts Receivable 320,000


    Sales 320,000

    NO ENTRY 128,000
    128,000

    Sales returns and allowances 2,500


    Accounts Receivable 2,500

    NO ENTRY 1,000
    1,000
    Perpetual Inventory System Periodic Inventory System

    Cost of goods sold Beginning Inventory


    iv. 128,000 Purchases
    1,000 v. Freight-in
    127,000 ending balance Purchase returns
    Purchase discounts
    Net purchases
    Total goods available for sale
    Ending Inventory
    Cost of goods sold
    ₱9,000.00
    ₱130,000.00
    5,000.00
    -3,000.00
    0.00
    132,000.00
    141,000.00
    -14,000.00
    ₱127,000.00
    Entity A
    Statement of Cost of goods sold and Gross profit
    For the period ended January 31, 20x1

    Sales ₱320,000.00
    Sales returns and allowances -2,500.00
    Net Sales 317,500.00
    Cost of goods sold:
    Beginning Inventory ₱9,000.00
    Add: Net purchases 132,000.00
    Total goods available for sale 141,000.00
    Less: Ending Inventory -14,000.00 -127,000.00
    Gross Profit ₱190,500.00

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