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Recording Merchandising Transactions

There are two systems for recording merchandising transactions: the perpetual system and the periodic system. The perpetual system records transactions as they occur through debit and credit entries. It includes purchase-related transactions like purchasing merchandise on credit, paying freight, returning merchandise, and paying accounts payable. It also includes sales-related transactions like selling merchandise on credit, paying freight, returning merchandise, and collecting accounts receivable. The periodic system summarizes purchase and sales transactions within a period through journal entries instead of individual transaction recording.

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1K views4 pages

Recording Merchandising Transactions

There are two systems for recording merchandising transactions: the perpetual system and the periodic system. The perpetual system records transactions as they occur through debit and credit entries. It includes purchase-related transactions like purchasing merchandise on credit, paying freight, returning merchandise, and paying accounts payable. It also includes sales-related transactions like selling merchandise on credit, paying freight, returning merchandise, and collecting accounts receivable. The periodic system summarizes purchase and sales transactions within a period through journal entries instead of individual transaction recording.

Uploaded by

acidreign
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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There are two systems of recording merchandising transactions: 1. Perpetual system 2.

Periodic system T here are two types of transactions in merchandising company: 1. purchase related transactions 2. sells related transactions

Purchase related transactions: [perpetual system]


a. purchase of merchandise Jan 1 purchased merchandise from X company at Tk 60000/= under terms 2/10, n30, FOB shipping point. 1-Jan merchandise inventory account payable 60000 60000

b. Payment of freight Jan 2 Paid freight cost on merchandising purchase to X company of Tk 2000/= 2-Jan merchandise inventory Cash 2000 2000

c. Return of merchandise previously purchased: Jan 4: returned damaged merchandise to X company of Tk 10000/= 4-Jan account payable merchandise inventory 10000 10000

d. Payment of account payable for previously purchased merchandise: Jan 30: paid in full to X company of Tk 50000/= 30-Jan account payable Cash 50000 50000

If this payment is made within jan 10 on 2/10 condition then the following transactions Takes place:

30-Jan

account payable cash merchandising inventory

50000 49000 1000

Sales related transactions: [perpetual system]


a. Sales of merchandise: Jan 11: merchandise costing of Tk 30000/= was sold to a company at Tk 60000/- under terms 2/10, n30, FOB destination. 11-Jan account receivable sales revenue cost of goods sold merchandise inventory 60000 60000 30000 30000

b. Payment of freight: On Jan 11: paid freight of Tk 2000/11-Jan freight out cash 2000 2000

c. Return of merchandise: Jan 13: received damaged merchandise returned by company A amounting of Tk 10000/-. The damaged merchandise has a scrap value of Tk 3000/13-Jan sales return & allowances account receivable merchandise inventory cost of goods sold 10000 10000 3000 3000

d. Collection of account receivable: Jan 21: collected accounts receivable from company A in full, less discount. 21-Jan cash sales discount account receivable 49000 1000 50000

PURCHASE RELATED MERCHANDISE


perpetual system a.) purchase of merchandise on credit/cash Merchandise inventory account payable b.) payment of freight Merchandise inventory cash c.) return of merchandise account payable merchandise inventory d.) payment of account payable account payable cash merchandise inventory xxx xxx xxx account payable cash purchase discount xxx xxx xxx xxx xxx account payable purchase return allowances xxx xxx xxx xxx fright in cash xxx xxx xxx xxx periodic system

purchase account payable

xxx xxx

SALES RELATED MERCHANDISE


perpetual system a.) sales of merchandise account receivable sales COGS merchandise inventory b.) payment of freight freight out cash c.) return of merchandise sales return & allowances account receivable merchandise inventory COGS d.) payment of account receivable cash sales discount account receivable xxx xxx xxx cash sales discount account receivable xxx xxx xxx xxx xxx xxx xxx sales return & allowances account receivable X X xxx xxx xxx xxx freight out cash xxx xxx xxx xxx xxx xxx periodic system

account receivable sales X X

xxx xxx

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