The following transactions were completed by Flashpoint Inc. for the month of
The company uses the perpetual system for merchandising transactions.
5 Mar. - Purchased merchandise from Mobley Co. for $9,000 under credit terms of 1/15, n/30, FOB shipping point.
6 Mar. - Sold merchandise to Cornerstone Company for $1,200 under credit terms of 2/10, n/60, FOB shipping point. The merchandise had cost $750.
7 Mar. - Paid $150 for freight charges on the purchase of March 5.
9 Mar. - Sold merchandise that cost $1,800 for $2,400 cash.
10 Mar.- Purchased merchandise from Richter Co. for $3,450 under credit terms of 2/15. n/60, FOB destination.
12 Mar. - Received a $300 credit memorandum acknowledging the return of merchandise purchased March 10.
16 Mar. - Received the balance due from Cornerstone Company for the credit sale dated March 6.
16 Mar. - Sold for cash a piece of office equipment at its original cost, $500.
20 Mar. - Paid the balance due to Mobley Co.
21 Mar. - Sold merchandise that cost $1,350 to Harrill Co. for $1,875 under credit terms of 2115, n/69, FOB shipping point.
22 Mar. - Issued a $300 credit memorandum to Harrill Co. for an allowance on goods sold March 21.
23 Mar. - Received a debit memorandum from Harrill Co. for an error that overstated the total invoice by $75.
25 Mar. - Paid Richter Co. the balance due.
31 Mar. - Received the balance due from Harrill Co. for the credit sale dated March 21.
a) Record the transactions above using the perpetual system.
b) In the general journal redo the transactions again using the periodic system.
Inventory systems can either be periodic or perpetual, depending on the choice of the organization or the nature of the inventory they are maintaining. Periodic inventory system does not create a real time inventory balance as it only reflects inventory balances after the conduct of physical count.
Answer and Explanation: 1
- Assume that the total fixed cost incurred daily is 120 and variable cost per unit is 10
With pricing of 25:
See full answer below.
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fromChapter 1 / Lesson 15
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.