This information relates to Blossom Co.: 1. On April 5, purchased merchandise from Sunland...
Question:
This information relates to Blossom Co.:
1. On April 5, purchased merchandise from Sunland Company for $28,800, terms 4/10 1. n/30.
2. On April 6, paid freight costs of $620 on merchandise purchased from Sunland Company.
3. On April 7, purchased equipment on account for $34,200.
4. On April 8, returned $3,500 of April 5 merchandise to Sunland Company
5. On April 15, paid the amount due to Sunland Company in full.
Required:
a. Prepare the journal entries to record the transactions listed above on Blossom Co.'s books. Blossom Co. uses a perpetual inventory system when amount is entered.
b. Assume that Blossom Co. paid the balance due to Sunland Company on May 4 instead of April 15. Prepare the journal entry to record this indented when amount is entered.
Purchase of Goods Under the Perpetual Inventory System Method:
A company may choose an inventory costing method that they think will fit their type of industry. This can either be periodic or perpetual system. When a company chose the perpetual inventory system, it always makes use of the "merchandise inventory" account when the transaction is related to the purchase of an inventory. This method makes the accounting of inventory more efficient since the system is always updated in terms of cost of goods or the remaining inventories.
Answer and Explanation: 1
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View this answer| Date | General Journal | Debit | Credit |
|---|---|---|---|
| April 5 | Merchandise Inventory | 28,800 | |
| Accounts payable | 28,800 | ||
| April 6 | Merchandise... |
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Recording Purchases Using the Perpetual System
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Chapter 6 / Lesson 6
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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.
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