Prepare the journal entries to record the following transactions on Markowitz Company's books...
Question:
Prepare the journal entries to record the following transactions on Markowitz Company's books using a perpetual inventory system.
On February 6, Markowitz Company sold $75,000 of merchandise to the Lyman Company, terms 2/10, net /30. The cost of the merchandise sold was $50,000. On February 8, the Lyman Company returned $10,000 of the merchandise purchased on February 6. The cost of the merchandise returned was $5,000. On February 16 Markowitz Company received the balance due from the Lyman Company.
Perpetual Inventory:
Perpetual inventory is an inventory system method which updates the inventory account regularly, (i.e., at the time of sale and purchases). This type of method does not make use of "purchases and purchase discounts" account. All accounts relating to the purchase and sale of inventory (COGS) are recorded directly in the inventory account.
Answer and Explanation: 1
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View this answer| Date | Account titles | Debit | Credit |
|---|---|---|---|
| February 6 | Accounts receivable | 75,000 | |
| Sales | 75,000 | ||
| Cost of goods sold | 50,000 ... |
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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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