Hello,

Please help, I have a quiz and I don't understand.

Journalize the following merchandising transactions for TCI assuming it uses (a) a periodic inventory system and (b) a perpetual inventory system. Prepare journal entries for both periodic and perpetual system.

1. on nov 1, TCI purchases merchandise for 1400 on credit with terms 2/5, n/30, FOB shipping point; invoice dated November 1.

2. On November 5, TCI pays cash for Novenber 1 purchase.

3. On November 7, TCI discovers and returns $100 of defective merchandise purchased on November 1 for a cash refund.

4. On November 10, TCI pays $ 80 cash for transportation costs with the November 1 purchase.

5. On November 13, TCI sells merchandise for 1,500 on credit. The cost of the merchdise is 750.

6. On November 16, the customer returns merchandise from the November 13 transaction. The returned items sell for 200 and cost 100.

Thank you for all your help! Please Help!

CaptainForest

The following website explains quite nicely the difference between Perpetual vs. Periodic Inventory System Journal Entries

http://ccba.jsu.edu/accounting/PERPETUALPERIODICJE.HTML

kendu2006

CaptainForest
Thanks for the link, I am still not sure but here is what I have.

Nov 1
$1320 debit
$ 80 Freight in expense

Nov 5
$1400 debit
$1400 AP cash credit

Nov 7
$100 credit
$100 AR

Nov 10
$ 80 debit
AP $ 80

Nov 13
$750 credit
$750 AR

Nov 16
$100 credit
$100 AR


Please help and let me know if correct. Thanks a million. Happy Holidays

CaptainForest

1. on nov 1, TCI purchases merchandise for 1400 on credit with terms 2/5, n/30, FOB shipping point; invoice dated November 1.

(a) a periodic inventory system
Dr. Purchases 1,400
Cr. AP 1,400

Also (see transaction 4 for more information):
Dr. Freight-in Expense 80
Cr. AP 80

(b) a perpetual inventory system
Dr. Inventory 1,400
Cr. AP 1,400

Also (see transaction 4 for more information):
Dr. Freight-in Expense 80
Cr. AP 80


2. On November 5, TCI pays cash for Novenber 1 purchase.

(a) a periodic inventory system
Dr. AP 1,400
Cr. Cash 1,372
Cr. Purchase Discount 28

1,400 less 2% = 1,400 x .98 = 1,372

(b) a perpetual inventory system
Dr. AP 1,400
Cr. Cash 1,372
Cr. Inventory 28


3. On November 7, TCI discovers and returns $100 of defective merchandise purchased on November 1 for a cash refund.

(a) a periodic inventory system
Dr. Cash 100
Cr. Purchase Returns & Allowance 100

(b) a perpetual inventory system
Dr. Cash 100
Cr. Inventory 100


4. On November 10, TCI pays $ 80 cash for transportation costs with the November 1 purchase.

(a) a periodic inventory system
Dr. AP 80
Cr. Cash 80

(b) a perpetual inventory system
Dr. AP 80
Cr. Cash 80


5. On November 13, TCI sells merchandise for 1,500 on credit. The cost of the merchdise is 750.

(a) a periodic inventory system
Dr. AR 1,500
Cr. Sales 1,500

(b) a perpetual inventory system
Dr. AR 1,500
Cr. Sales 1,500

Dr. COGS 750
Cr. Inventory 750


6. On November 16, the customer returns merchandise from the November 13 transaction. The returned items sell for 200 and cost 100.

(a) a periodic inventory system
Dr. Sales Returns and Allowances 200
Cr. AR 200

(b) a perpetual inventory system
Dr. Sales Returns and Allowances 200
Cr. AR 200

Dr. Inventory 100
Cr. COGS 100

CaptainForest

You're welcome.