[gabby_610]

Please help me...
I was so confused in using perpetual inventory system in merchandising.. hope ou guys help me :)

What should be my entry if the transaction is like this :

MAY 15 Sold goods to Bessie's Appliance Store, P50,000. Terms: 50% down, balance 1/15. n/30.

My answer is :

DR. CASH... 25,000
Accounts Receivable... 25,000
CR. SALES... 50,000

DR. COST of GOOD SOLD... 50,000
CR. MERCHANDISE INVENTORY... 50,000


IS THIS CORRECT?
PLEASE HELP ME :)

THANKS

[morgaine300]

[QUOTE=gabby_610;1966162]

DR. CASH... 25,000
Accounts Receivable... 25,000
CR. SALES... 50,000

DR. COST of GOOD SOLD... 50,000
CR. MERCHANDISE INVENTORY... 50,000

The first one is completely correct. The second one you have the correct accounts, but not the correct dollar amount. I don't know what it's supposed to be because you didn't quote that part. But it wouldn't be the same 50,000.

COST of goods sold is your cost to buy the merchandise. You then mark it up and sell it for a higher price. So the sales is going to be higher than the cost. If you purchased it at 50,000 and also sold it at 50,000, not only are you not making any money, but you're losing cause you have other expenses too.

The problem should give you what the cost is, or perhaps there's something in the instructions telling you what to do with that.