What account is debited when recording a purchase of inventory when using a periodic inventory system?
The purchase account is debited when recording a purchase of inventory while using a periodic inventory system.
A periodic inventory system refers to the system in which an inventory account is updated at the end of an accounting period. It facilitates the business entities to track their opening and closing inventory balances.
When inventory is purchased under the periodic inventory system, the purchase account is debited to record such a transaction.
Journal entry to record the purchase of inventory is as follows:
Accounts and Explanation
(To record the purchase of inventory)
On November 4, 2018, Cain Company sold merchandise inventory on account to Tarin Wholesalers, $12,000, that cost $4,800. Terms 3/10, n/30. On November 5, 2018, Tarin Wholesalers paid shipping of $30. Tarin Wholesalers paid the balance to Cain Company on November 13, 2018.
1. Journalize Tarin Wholesaler’s November transactions.
2. Journalize Cain Company’s November transactions.
The adjusted trial balance of Quality Office Systems at March 31, 2018, follows:
1. Journalize the required closing entries at March 31, 2018.
2. Set up T-accounts for Income Summary; Retained Earnings; and Dividends. Post the closing entries to the T-accounts, and calculate their ending balances.
3. How much was Quality Office’s net income or net loss?
Journalize the following transactions that occurred in January 2018 for Sylvia’s Amusements. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Sylvia estimates sales returns at the end of each month.
Jan. 4 Purchased merchandise inventory on account from Vanderbilt Company, $7,000. Terms 1/10, n/EOM, FOB shipping point.
6 Paid freight bill of $100 on January 4 purchase.
8 Returned half the inventory purchased on January 4 from Vanderbilt Company.
10 Sold merchandise inventory for cash, $1,600. Cost of goods, $640. FOB destination.
11 Sold merchandise inventory to Graceland Corporation, $10,800, on account, terms of 1/10, n/EOM. Cost of goods, $5,400. FOB shipping point.
12 Paid freight bill of $60 on January 10 sale.
13 Sold merchandise inventory to Cabbell Company, $9,500, on account, terms of n/45. Cost of goods, $5,225. FOB shipping point.
14 Paid the amount owed on account from January 4, less return and discount.
17 Received defective inventory as a sales return from the January 13 sale, $600. Cost of goods, $300.
18 Purchased inventory of $4,600 on account from Roberts Corporation. Payment terms were 3/10, n/30, FOB destination.
20 Received cash from Graceland Corporation, less discount.
26 Paid amount owed on account from January 18, less discount.
28 Received cash from Cabbell Company, less return.
29 Purchased inventory from Sandra Corporation for cash, $11,600, FOB shipping point. Freight in paid to shipping company, $240.
The records of Grade A Beef Company list the following selected accounts for the quarter ended September 30, 2018:
Interest Revenue $ 900 Accounts Payable $ 17,000
Merchandise Inventory 46,300 Accounts Receivable 33,500
Notes Payable, long-term 47,000 Accumulated Depreciation— Equipment 36,500
Salaries Payable 2,600 Common Stock 38,000
Net Sales Revenue 294,000 Retained Earnings 3,610
Rent Expense (Selling) 16,700 Dividends 15,000
Salaries Expense (Administrative) 2,500 Cash 7,300
Office Supplies 5,800 Cost of Goods Sold 161,700
Unearned Revenue 13,800 Equipment 131,000
Interest Expense 2,300 Interest Payable 900
Depreciation Expense—Equipment (Administrative) 1,310
Rent Expense (Administrative) 7,400
Utilities Expense (Administrative) 4,500 Salaries Expense (Selling) 5,000
Delivery Expense (Selling) 3,100 Utilities Expense (Selling) 10,900
1. Prepare a single-step income statement.
2. Prepare a multi-step income statement.
3. J. Douglas, manager of the company, strives to earn a gross profit percentage of at least 50%. Did Grade A Beef achieve this goal? Show your calculations
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