The perpetual inventory system keeps continuous records of inventories by recording all transactions. This system allows companies, at any given time, to know the current cost of inventory on hand and provides them with a better understanding of their sales profits. With the perpetual inventory system, sales, sales returns and allowances, and purchases are recorded differently than in the periodic inventory system. While the actual sales portion of the sales transaction is recorded the same under both methods, the perpetual inventory system requires an additional step in the recording process. To track the inventory and costs, accountants using the perpetual inventory system debit Cost of Goods Sold and credit Merchandise Inventory. Record the following transactions for West Company in general journal form. West Company uses the perpetual inventory system. ⚫ July 2 Sold merchandise on account to Perry, Inc., invoice no. 1547, $2,125.75. Cost of inventory sold is $1,975.75. ⚫ July 7 Sold merchandise on account to Robyn Co., invoice no. 1548, $3,560.25. Cost of inventory sold is $2,850.20. ⚫ July 9 Perry, Inc., returned $625.00 worth of merchandise purchased on July 2, with a cost of $415.30. West Company issued credit memorandum no. 257. DATE July 2 July 2 GENERAL JOURNAL DESCRIPTION POST. REF. DEBIT CREDIT Sold merchandise on account to Perry Inc., Inv. No. 1547
The perpetual inventory system keeps continuous records of inventories by recording all transactions. This system allows companies, at any given time, to know the current cost of inventory on hand and provides them with a better understanding of their sales profits. With the perpetual inventory system, sales, sales returns and allowances, and purchases are recorded differently than in the periodic inventory system. While the actual sales portion of the sales transaction is recorded the same under both methods, the perpetual inventory system requires an additional step in the recording process. To track the inventory and costs, accountants using the perpetual inventory system debit Cost of Goods Sold and credit Merchandise Inventory. Record the following transactions for West Company in general journal form. West Company uses the perpetual inventory system. ⚫ July 2 Sold merchandise on account to Perry, Inc., invoice no. 1547, $2,125.75. Cost of inventory sold is $1,975.75. ⚫ July 7 Sold merchandise on account to Robyn Co., invoice no. 1548, $3,560.25. Cost of inventory sold is $2,850.20. ⚫ July 9 Perry, Inc., returned $625.00 worth of merchandise purchased on July 2, with a cost of $415.30. West Company issued credit memorandum no. 257. DATE July 2 July 2 GENERAL JOURNAL DESCRIPTION POST. REF. DEBIT CREDIT Sold merchandise on account to Perry Inc., Inv. No. 1547
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter11: Auditing Inventory, Goods And Services, And Accounts Payable: The Acquisition And Payment Cycle
Section: Chapter Questions
Problem 9RQSC
Related questions
Question
Transcribed Image Text:The perpetual inventory system keeps continuous records of inventories by recording all transactions. This system allows
companies, at any given time, to know the current cost of inventory on hand and provides them with a better understanding of
their sales profits. With the perpetual inventory system, sales, sales returns and allowances, and purchases are recorded
differently than in the periodic inventory system. While the actual sales portion of the sales transaction is recorded the same
under both methods, the perpetual inventory system requires an additional step in the recording process. To track the
inventory and costs, accountants using the perpetual inventory system debit Cost of Goods Sold and credit Merchandise
Inventory.
Record the following transactions for West Company in general journal form. West Company uses the perpetual inventory
system.
⚫ July 2 Sold merchandise on account to Perry, Inc., invoice no. 1547, $2,125.75. Cost of inventory sold is $1,975.75.
⚫ July 7 Sold merchandise on account to Robyn Co., invoice no. 1548, $3,560.25. Cost of inventory sold is $2,850.20.
⚫ July 9 Perry, Inc., returned $625.00 worth of merchandise purchased on July 2, with a cost of $415.30.
West Company issued credit memorandum no. 257.
DATE
July 2
July 2
GENERAL JOURNAL
DESCRIPTION
POST. REF.
DEBIT
CREDIT
Sold merchandise on account to Perry Inc., Inv. No. 1547
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