Assume that a perpetual inventory system using the NET METHOD is in use. Which of the following statements regarding the journal entries prepared is correct? A)  When a customer returns inventory, the seller debits Customer Refunds Payable. B)  Shipping costs associated with sales with terms FOB, destination should be included in Cost of Merchandise Inventory. C)  When a company receives payment from a customer for a sale, Cash is debited and Accounts Payable is credited. D)  When a company sells merchandise with terms 2/10, n 30, the company will credit Merchandise Inventory for the amount of the discount of 2 percent of sales. Why is the answer A and not D?

Q: List the steps to record sales under a perpetual inventory system as a buyer and a seller.

A: The accounting practice of perpetual inventory allows a company to keep continuous, real-time track…

Q: Which one of the following transactions is recorded with the same entry in a perpetual and a…

A: With the perpetual system all the sales are directly credited to inventory and all the purchases are…

Q: The elimination entry under the perpetual inventory system for intercompany sales  is a debit to…

A: SOLUTION- THE ELIMINATION ENTRY REMOVES IC SALES FROM THE CONS. UNIT (VENDOR) AND IC PURCHASE FROM…

Q: In the Perpetual/Periodic Inventory System what are the merchandise inventory and Income summary?…

A: Perpetual inventory: Under perpetual inventory system each transaction for purchase of inventory,…

Q: Under the perpetual inventory system, increases and decreases in inventory are recorded through the…

A: Solution: Under perpetual inventory system, inventory records are updated with every purchase and…

Q: Match the accounting terminology to the definitions. AClick the icon to view the definitions.) More…

A: Definition: Perpetual Inventory System: Perpetual Inventory System refers to the inventory system…

Q: Which of the following journal entries would you record to recognize the sale of inventory on…

A: (1) Debit what comes in, Credit what goes out. (2) Debit all expenses and losses, Credit all…

Q: Which journal entry is correct when there is a sale under a perpetual inventory and FOB shipping…

A: Solution- Accounts payable -------------------DR                 To Merchandise inventory. (To…

Q: 2. The entry to record the return of $25 of inventory to a supplier under the perpetual inventory…

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Q: Using a perpetual inventory system, the purchase of inventory on account would be recorded as a.…

A: Under perpetual inventory system, when inventory are purchased on account, then purchases account is…

Q: Make a comparison between periodic and perpetual inventory systems and explain under which…

A: Answer: As per Q/A guidelines first question has been answered. Please repost remaining question.…

Q: Mcq In a perpetual inventory system, the amount of the discount allowed for paying for merchandise…

A: Perpetual inventory system is an inventory system in which all transactions related to inventory are…

Q: Under the perpetual inventory system, cost of goods sold is debited when inventory is sold and…

A: Solution: Under perpetual inventory system, inventory is updated with every purchase and sales. Cost…

Q: When recording a purchase of inventory on credit, which accounts are typically affected? A) Debit…

A: When assets or expenses increases it should be debited and when decreases it should be…

Q: In a perpetual system, what would be the journal entry for a sales return. (a) Dr. Sales return and…

A: Journal entry is a process of recording the business transactions in the books of accounts for the…

Q: When a retailer sells merchandise to a customer on credit which one of the following accounts is…

A: Selling merchandise to the customer would include two journal entries, one is for selling goods, and…

Q: When using the perpetual system for inventory, the journal entry to record a purchase of inventory…

A: The objective of the question is to identify the correct journal entry to record a purchase of…

Q: Which of the following is a true statement about inventory systems? A perpetual system determines…

A: The correct statement about inventory systems is:Perpetual inventory systems require more detailed…

Q: Which of the following groupings of accounts includes only accounts that carry a normal credit…

A: The assets and expenses have the normal debit balance and these accounts are debited with increase…

Q: What accounts are used to recognize a retailer's purchase from a manufacturer on credit? Assume the…

A: Perpetual inventory system is a method under which the movement of inventory is recorded at…

Q: Under the perpetual inventory system, which of the following accounts is credited in the adjusting…

A: The objective of the question is to identify the correct account that is credited in the adjusting…

Q: When the merchandise inventory account provides a running balance of the goods on hand, which…

A: The question is related to Inventory system. There are two methods of Inventory.Perpetual inventory…

Q: In recording the cost of goods sold based on data available from perpetual inventory records, the…

A: The inventory method is allocated into two categories i.e. perpetual inventory system and periodic…

Q: Using a perpetual inventory system, the entry to record the sale of merchandise on account includes…

A: Perpetual inventory system: The method or system of maintaining, recording, and adjusting the…

Q: The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month…

A: As per First in First Out method(FIFO) inventory sold is from units purchased earlier, therefore…

Q: 3.Which of the following transactions would not result in an adjustment to the inventory account…

A: Perpetual inventory system is the one in which the record relating to the inventory is to be…

Q: If a customer purchases merchandise on credit and returns the defective merchandise beforepayment,…

A: When customer made purchases on credit from the business, then one side it will generate accounts…

Q: A seller generally records sales at the full invoice price, butthe buyer often records purchases at…

A: A seller generally records sales at full invoice price, but buyer often records purchase at net…

Q: If each purchase and sale of merchandise is recorded in the inventory and the cost of merchandise…

A: Under periodic inventory, no cost of goods sold is entry is recorded for every sale transaction. At…

Q: Using a perpetual inventory system, the return to their supplier of merchandise purchased on account…

A: When merchandise purchased on credit Inventory accout is debited and accounts payable is credited.…

Q: The journal entry to record a return of merchandise purchased on account under a perpetual inventory…

A: (1) Debit what comes in, Credit what goes out.(2) Debit all expenses and losses, Credit all incomes…

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is