Question

please help with A. B and C.

Our Stuff Company wants you to provide information on the inventory methods available. You rasked to complete parts a, b, and c for the bookkeeper to provide information to the company. Record each of the following transactions using the periodic method Receipt of inventory 1 Purchased $7,900 of goods on account. The freight charges on the goods were June/ $50. Ime 13 Found some of the goods from the June I purchase to be slightly damaged, but we can use them; informed the seller, who reduced the amount we owed by 545. Some items costing $150 were not what we had ordered and could not be used. We returned these items, and the supplier reduced the amount we owed. June 20 Paid the supplier the amount owed. Lune 30 Periodic Inventory Entries:

Answer 1

a) Periodic Inventory Entries:

   Merchandise Inventory A/c Dr $ 7755 (Balance Figure)

Purchase Allowance A/c Dr $ 45

Purchase Return A/c Dr $ 150

To Purchase A/c $ 7900

To Transport Charges A/c $ 50

______________________________________________________________________

Cost of Goods Sold A/c Dr $ 7755

  Merchandise Inventory A/c $ 7755

(inventory transfered to cost of Goods Sold)

______________________________________________________________________________

Supplier A/c Dr $ 7755

Cash A/c $ 7755

(Piad to supplier)

______________________________________________________________________________

b) Perpetua Inventory Entries:

Merchandise Inventory A/c Dr $ 7755 (Balance Figure)

Purchase Allowance A/c Dr $ 45

Purchase Return A/c Dr $ 150

To Purchase A/c $ 7900

To Transport Charges A/c $ 50

______________________________________________________________________

Cost of Goods Sold A/c Dr $ 7755

  Merchandise Inventory A/c $ 7755

(inventory transfered to cost of Goods Sold)

______________________________________________________________________________

Cost of Goods Sold A/c Dr $ NIL OR  Merchandise Inventory A/c Dr

Merchandise Inventory A/c $ NIL   Cost of Goods Sold A/c

(To adjust inventory to match the physical count. )

_________________________________________________________________________

Supplier A/c Dr $ 7755

Cash A/c $ 7755

(Piad to supplier)

___________________________________________________________________

c)The periodic inventory methods has TWO additional adjusting entries at the end of the period. The first entry closes the purchase accounts (purchases, transportation in, purchase discounts, and purchase returns and allowances) into inventory by increasing inventory. The second entry records cost of goods sold for the period calculated as beginning inventory (unadjusted trial balance amount) + net purchases – ending inventory (physical inventory account) from the inventory account.

The perpetual inventory method has ONE additional adjusting entry at the end of the period. This entry compares the physical count of inventory to the inventory balance on the unadjusted trial balance and adjusts for any difference. The difference is recorded into cost of goods sold and inventory.