Alpha Company used the periodic inventory system for the purchase & sales of merchandise....
Question:
Alpha Company used the periodic inventory system for the purchase & sales of merchandise. Discount terms for both purchase & sales are, FOB Destination, 2/10, n30 and the gross method is used.
- Alpha Company purchased on account $2,600 of merchandise from Bravo Company on May 2, 2016.
- Alpha Company returned, to Bravo Company, $300 of this merchandise on May 3, 2016.
- Freight charges related to this transaction of $150 were paid by Bravo Company.
Use this information to prepare the General Journal entries (without explanation) for May 2 & May 3 entries. If no entry is required then write "No Entry Required."
Record Inventory Transactions Following Periodic Inventory Method
Company's have one of two choices of how to record inventory transactions in the books and records and in the general ledger. Most smaller Companies which cannot afford to invest in technology-related tools record inventory transactions using the periodic inventory method, whereby all purchases are recorded to a purchases account, and the physical inventory at the end of a period is counted and valued to then finalize the process of recording cost of goods sold expense (beginning inventory + purchases - ending inventory = cost of goods sold expense).
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View this answer- Use this information to prepare the General Journal entries (without explanation) for May 2 & May 3 entries. If no entry is required then write...
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Chapter 1 / Lesson 14Explore the periodic inventory system. Learn the definition of the periodic inventory system and understand its advantages. See periodic inventory system examples.
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