[jmancer]

I can't figure out what I am missing under a periodic inventory. My beginning merchadise inventory as of jan 1 is 20,000. Merchandise inventory at Jan 31st is 15000. How do I record on the worksheet the diffrence between the beginning and ending merchandise inventory. Do I have to add an account. Is an account under the income statement of the worksheet. Where did the 5,000 diffrence go. The following accounts are listed on my worksheet. My net income should be 9685. But here it is 14685. Help!

Trial Balance
Cash 41,990
Accounts Receivable 23,000
Notes Receivable 39,000
Merchandise Inventory20,000
Office Supplies 1,600
Prepaid Insurance 2,000
Equipment 6,450
Accumu Depr- Equip 1,500
Notes Payable 15,000
Accounts Payable 23,700
Interest Payable
I. Packard, Capital 78,700
I. Packard, Drawing 800
Sales 77,720
Sales Returns and all. 300
Purchases 52,600
Purchase Returns &all. 200
Freight-in 180
Sales Salaries Expense 4,300
Office Salaries Expense 3,600
Rent Expense 1,000
Totals 196,820 196,820

[morgaine300]

It's been a long time since I've done the adjustment for periodic inventory. But if memory serves, you credit out your inventory beginning balance and debit income summary. Then debit in the ending balance of your inventory (which will now have a correct balance) and then credit the income summary.

The difference between the inventory will now be in income summary. That, combined with purchases, discounts, etc. will create the math for cost of goods sold. (Even though the account is not on there, the net of all those numbers is what cost of goods sold will end up being.)

If this makes it work out, great. If not, um... you might want to post again. :-) But I do think that's how it's done.