Suppose NEC Sales Co. engaged in the following transactions during June of the current year: June...


Suppose NEC Sales Co. engaged in the following transactions during June of the current year:

June 3 Purchased inventory RM1,600 on credit terms of 2/10, net 30.
6 Returned 40% of the inventory purchased on June 3. It was defective.
9 Sold goods for cash, RM1,000 (cost RM550).
11 Paid the amount owed on account from the purchase of June 3, less the June 6 return.
15 Purchased goods for RM5,000. Credit terms were 3/15, net 30.
16 Paid a RM200 freight bill on goods purchased.
18 Sold inventory for RM2,000 on credit terms of 2/10, n/30 (cost, RM950).
20 Received returned goods from the customer of June 18 sale RM800 (cost RM480).
25 Received cash in full settlement of the account from the customer who purchased inventory on June 18, less the return and discount.
28 Sold goods for cash, RM3,200 (cost RM1,800).

Prepare the journal entries to record the transactions assuming the company uses a perpetual inventory system.

Recording Inventory Sales and Purchases:

The manner in which inventory sales and purchases are recorded depends on whether the entity uses the periodic or perpetual inventory system. In the perpetual system, the inventory asset account is updated with each transaction.

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Under the perpetual system, inventory purchases are recorded in the inventory asset account, and each time a sales transaction is recorded, the...

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Recording Sales Using the Perpetual System


Chapter 6 / Lesson 8

Sales can be recorded in two inventory systems: periodic, where inventory is updated in chronological increments, or perpetual, where inventory is updated for each individual sale. Identify the benefits to using these systems and review examples of how each records a business's sales.

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