Entity A had the following transactions: (1) May 1, 20×1: Purchased 260 units of merchandise at $10 per unit and paid $2,600 in cash. (2) May 10, 20×1: Sold 50 units of merchandise at $14 per unit and received $700 in cash. Prepare journal entries to record these transactions...
Merchandise Inventory
A company is required to use the same accounting methods from period to period (consistency principle). A change is only acceptable when it improves financial reporting. The costing method used must be disclosed in the notes to the financial statements (full-disclosure principle). Inventory must ...
InventoryAccountingSystems Perpetualsystemsmaintainarunningrecordtoshowtheinventoryonhandatalltimes.Periodicsystemsdonotkeepacontinuousrecordofinventoryonhand.Objectives1and2ComputeandrecordjournalentriesforperpetualinventoryamountsunderFIFO,LIFO,andaveragecost.PerpetualSystem DebitInventoryCreditCashorAccountsPayableDebitCash...
Here’s an example of the typical merchandiser’s operating cycle and the journal entries required. Example When a retailer purchases inventory from a manufacturer, it is recorded as an asset by debiting the inventory account and crediting cash or accounts payable. Notice that inventory is not ex...
Accounting for Merchandise Inventory Chapter 6 Perpetual systems maintain a running record to show the inventory on hand at all times. Periodic systems do not keep a continuous record of inventory on hand. Inventory Accounting Systems Compute and record journal entries for perpetual inventory amounts ...
Business Accounting Perpetual inventory What inventory system uses merchandise purchase instead of inventory?Question:What inventory system uses merchandise purchase instead of inventory?Inventory Systems:Inventory systems are systems or processes in which movement of inventories, such as purchase and sa...
P & S are shown as 1 Co.– E.g., Must eliminate intercompany accounts (A/R & A/P)E.g., Must eliminate intercompany accounts (A/R & A/P)• Because one Co doesn’t not owe $ to itself– These WS entries same regardless of accounting method• Cost, Simple Equity or ...
–E.g.,Musteliminateintercompanyaccounts(A/R&A/P)E.g.,Musteliminateintercompanyaccounts(A/R&A/P) •BecauseoneCodoesn’tnotowe$toitself –TheseWSentriessameregardlessofaccountingmethod •Cost,SimpleEquityorSophisticatedEquityMethods 3–IntercompanySalesofMerchandise-Heading IntercompanySalesofMerchandise 4–...
InventoryAccountingSystems Perpetualsystemsmaintainarunningrecordtoshowtheinventoryonhandatalltimes.Periodicsystemsdonotkeepacontinuousrecordofinventoryonhand.Objectives1and2ComputeandrecordjournalentriesforperpetualinventoryamountsunderFIFO,LIFO,andaveragecost.PerpetualSystem DebitInventoryCreditCashorAccountsPayableDebitCash...