Taos Company purchased merchandise for resale from Tuscon Company with an invoice price of...
Question:
Taos Company purchased merchandise for resale from Tuscon Company with an invoice price of $22,000 and credit terms of 3/10. n/60. The merchandise had cost Tuscon $15,000. Taos paid within the discount period. Assume that both buyer and seller use a perpetual inventory system. Prepare entries that the buyer should record for (a) the purchase and (b) the cash payment.
Perpetual Inventory:
The perpetual inventory technique is a modern method to record the value of inventory and keep track of the remaining inventory available with the company. The accounting records are updated after every sale and purchase of the inventory.
Answer and Explanation: 1
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| Date | Particulars | Debit | Credit |
|---|---|---|---|
| Apr. 1 | Merchandise inventory | 22,000 | |
| Accounts payable | 22,000 |
b.
Cash check sent = Value of purchases - (Discount...
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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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