Prepare journal entries to record the following transactions, assuming perpetual inventory...
Question:
Prepare journal entries to record the following transactions, assuming perpetual inventory updating and first-in, first-out (FIFO) cost allocation. Assume no beginning inventory.
| Number of Units | Unit Cost | |
| Jan. 2, purchased merchandise for resale | 300 | $21 |
| Jan. 12, purchased merchandise for resale | 200 | $24 |
| Jan. 16, sold merchandise for $40 per unit | 220 |
Perpetual Inventory:
A company that is following the perpetual inventory method will record the financial transactions of inventory sales immediately with the help of a computerized system. This method can provide real-time data about inventory.
Answer and Explanation: 1
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View this answerThe journal entry will be as follows:
| Date | Particulars | Debit ($) | Credit ($) | Calculation |
|---|---|---|---|---|
| Jan. 2 | Inventory | 6,300 | 300 * $21 | |
| Cash | 6,300 | |||
| Jan. 12 | Inventory | 4,... |
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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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