Merchandise Transactions under Perpetual Inventory System
What are the merchandise transactions that occurred under perpetual inventory system? How do we record these transactions?
Jul 1: Business purchased $5,100 inventory from MCS Inc. on credit (Term 2/10, n/30 FOB) Entry: Inventory (asset) $5,100, Accounts Payable $5,100 Entry: Business purchased $2,200 inventory from DCP Inc. and paid in cash. Entry: Inventory (asset) $2,200, Cash $2,200 Entry: Business paid $235 shipping charges for the inventory purchased on Jul 1. Entry: Shipping Expense (expense) $235, Cash $235 Entry: Business purchased $6,300 inventory from Time's Inc. on credit (Term 2/10, n/30 FOB) Entry: Inventory (asset) $6,300, Accounts Payable $6,300 Entry: Business found $125 defective units from the Jul 8 purchase and returned them to Time's Inc. Entry: Accounts Payable $125, Inventory (asset) $125 Entry: Business paid MCS Inc in full. Entry: Accounts Payable $5,100, Cash $5,100 Entry: Business paid Time's Inc in full. Entry: Accounts Payable $6,300, Cash $6,300 Entry: If the business was paying Time's Inc on Jul 18. Entry: Accounts Payable $6,300, Cash $6,300 The entries record the merchandise transactions and payments related to inventory purchases and returns. The terms (2/10, n/30) indicate a discount of 2% if paid within 10 days and a net payment period of 30 days.Recording Merchandise Transactions
Jul 2:
Jul 3:
Jul 8:
Jul 12:
Jun 15:
Jul 30:
Instead of paying Time's Inc on Jul 30: