Radomir Company buys merchandise on account from Lernke Company. The selling price of the goods is $780, and the cost of the goods is $470. Both companies use the perpetual inventory systems.
Journalize the transaction on the books of both companies.
The perpetual inventory system is a method of recording inventories wherein the inventory account is updated every after each sale and purchase. This means that there is no purchase account in the books since for each purchase, the merchandise inventory is updated, hence the entry is always a debit to merchandise inventory.
Answer and Explanation: 1
Merchandise Inventory 780
Accounts Payable 780
Accounts Receivable ...
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fromChapter 6 / Lesson 6
The perpetual system is used by updating the inventory account for every purchase and sale. Learn how to record a purchase using the system of double-entry accounting.