Periodic Inventory System The following selected transactions were completed by Air System...
Question:
Perpetual Inventory System
The following selected transactions were completed by Air System Company during January of the current year. Air System Company uses the perpetual inventory system.
Jan. 2. Purchased $18,200 of merchandise on account, FOB shipping point, terms 2/15,n/30.
5. Paid freight of $190 on the January 2 purchase.
6. Returned $2,750 of the merchandise purchased on January 2.
13. Sold merchandise on account, $37,300, FOB destination 1/10, n/30. The cost of merchandise sold was $22,400.
15. Paid freight of $215 for the merchandise sold on January 13.
17. Paid for the purchase of January 2 less the return and discount.
23. Received payment on account for the sale of January 13 less than the discount.
Journalize the entries to record the transactions of Air Systems Company.
Purchases and Sales Using a Perpetual Inventory System
It is very important to both practice and to learn how to record transactions under a perpetual inventory system. These transactions include recording in the proper general ledger accounts the purchases from inventory from a third party; the recording of any merchandise returns to a third party; the record of any prompt payment discounts on the invoice from the supplier/vendor; and then the subsequent sale of the inventory to a customer, including their returns and any prompt payment discounts the customer takes advantage of.
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View this answerJournalize the entries to record the transactions of Air Systems Company.
Jan. 2. Purchased $18,200 of merchandise on account, FOB shipping point,...
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Perpetual Inventory System: Definition, Advantages & Examples
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Chapter 1 / Lesson 15
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Perpetual inventory systems are used by businesses to monitor their inventories in real-time with the use of radio frequency identification, barcodes, point of sales, and other technological systems. Learn about the definition of a perpetual inventory system, the advantages of using this system, and some examples of perpetual inventory systems.
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