Target Store uses the periodic inventory system and had the following transactions during the month of May:
- May 3 - Sold merchandise to a customer on credit for $600, terms 2/10, n/30. The cost of merchandise sold was $350.
- May 4 - Sold merchandise to a customer for cash of $425. The cost of the merchandise was $250.
- May 6 - Sold merchandise to a customer on credit for $1,300, terms 2/10, n/30. The cost of the merchandise sold was $750.
- May 8 - The customer from May 3 returned merchandise with a selling price of $100. The cost of the merchandise retuned was $55.
- May 15 - The customer from May 6 paid the full amount due, less any appropriate discounts earned.
- May 31 - The customer from May 3 paid the full amount due, less any appropriate discounts earned.
Prepare and explain the required journal entries that Target Store must make to record these transactions.
Inventory represents items purchased for resale or items in the process of being manufactured for sale. Items remain on the balance sheet until sold. The amount of inventory held varies from company to company. All transactions are recorded via journal entries.
Answer and Explanation: 1
In a periodic system of inventory, inventory is updated occasionally or periodically to ensure accuracy. In inventories of large quantities,...
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fromChapter 1 / Lesson 14
Explore the periodic inventory system. Learn the definition of the periodic inventory system and understand its advantages. See periodic inventory system examples.