On September 1, Nixa Office Supply had an inventory of 35 calculators at a cost of $18 each. The company uses a perpetual inventory system. During September, the following transactions occurred.
Sept. 6 Purchased with cash 85 calculators at $25 each from York Co.
Sept. 9 Paid freight of $85 on calculators purchased from York Co
Sept. 10 Returned 5 calculators to York in exchange for $130 cash (including reimbursement for freight fee) because they did not meet specifications.
Sept. 12 Sold 27 calculators costing $26 (including freight) for $32 each to Sura Book Store, terms n/30
Sept. 14 Granted credit of $32 to Sura Book Store for the return of one calculator that was not ordered
Sept. 20 Sold 31 calculators costing $26 for $33 each to Davis Card Shop, terms n/30
Journalize the September transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem)
Inventory is current assets that can be in different stages of production for the purpose of sale. The different stages can be categorized as raw substance, work-in-progress, and completed products.
The Perpetual Inventory System
- The perpetual inventory system is an accounting system where inventory purchases are allocated to the inventory asset.
- The cost of goods sold expense is calculated for each sales transaction and recorded at the same time the sales revenue is recorded. This implies that the inventory asset is reduced by each sale.
- This results in a theoretical ending inventory in the inventory asset account that should be the same as the inventory physically on hand.
Answer and Explanation: 1
The journal entries are as follows:
|September 6||Merchandise Inventory Dr.||$2125|
|To Cash account||$2125|
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fromChapter 13 / Lesson 7
Learn what inventory in business is. Find out three types of inventory management systems and the benefits of each. Understand inventory management through examples.