Instructions In this assignment you will record eight transactions related to the sale and purchase of merchandise. You will record each transaction according to the procedures of a periodic inventory system. You will record each transaction according to the procedures of a perpetual inventory system. Include the date for each transaction. Include a brief explanation for each entry similar to the sample entry example. Please skip a line between each transaction entry. You may use the journals provided or create your own journals. If you create your own journals they must have a date column, description column, a debit column and a credit column. You may hand write the journal entries or type them. Transactions to Record Sample Ace Company issues a $200 Sales Allowance to a customer who received damaged merchandise purchased in Feb from Ace. Mar 1 Ace Company sells merchandise totaling $1,500 on account with terms 2/15, n/30, FOB destination. Cost of goods is $600. Mar 3 Ace Company pays $75 cash to FedEx to send Mar 1 merchandise to customer. Mar 7 Ace Company received a return from the Mar 1 customer. Ace gives the customer $400 credit, which is the amount the customer was charged for the items on Mar 1. Ace’s cost of the returned merchandise is $160. Mar 10 Ace Company purchases 50 pieces of merchandise for $5,000 with terms 3/10, n/30, FOB shipping point. Mar 15 Customer payment received for Mar 1 purchase less the Mar 7 return. Mar 16 Several pieces of merchandise from the Mar 10 purchase are damaged. Ace’s manager negotiates with the supplier, agreeing to keep the items in exchange for a $500 allowance applied to Ace’s account. Mar 18 Ace Company pays the $200 freight bill received when the mar 10 merchandise was delivered. Mar 19 Ace Company pays for the Mar 10 purchase less the Mar 16 allowance Below is a sample transaction recorded in the journal using the periodic method and the perpetual method. This transaction is recorded using the same accounts for both the periodic and perpetual inventory systems. This will not always be the case. Lesson 8 Ch 6 Merchandising Transaction LO6.7provides a list of transactions that result in the same entry for both methods and explains the transactions that are recorded differently. Periodic Inventory System Journal Entries Perpetual Inventory System Journal Entries Date Description Debit Credit Date Description Debit Credit Sample Sales Returns & Allowances 200 Sample Sales Returns & Allowances 200 Accounts Receivable 200 Accounts Receivable 200 Sales allowance issued for damaged merchandise. Sales allowance issued for damaged merchandise.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Instructions
In this assignment you will record eight transactions related to the sale and purchase of merchandise.
- You will record each transaction according to the procedures of a periodic inventory system.
- You will record each transaction according to the procedures of a perpetual inventory system.
- Include the date for each transaction.
- Include a brief explanation for each entry similar to the sample entry example.
- Please skip a line between each transaction entry.
You may use the journals provided or create your own journals. If you create your own journals they must have a date column, description column, a debit column and a credit column. You may hand write the
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Transactions to Record |
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Sample |
Ace Company issues a $200 Sales Allowance to a customer who received damaged merchandise purchased in Feb from Ace. |
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Mar 1 |
Ace Company sells merchandise totaling $1,500 on account with terms 2/15, n/30, FOB destination. Cost of goods is $600. |
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Mar 3 |
Ace Company pays $75 cash to FedEx to send Mar 1 merchandise to customer. |
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Mar 7 |
Ace Company received a return from the Mar 1 customer. Ace gives the customer $400 credit, which is the amount the customer was charged for the items on Mar 1. Ace’s cost of the returned merchandise is $160. |
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Mar 10 |
Ace Company purchases 50 pieces of merchandise for $5,000 with terms 3/10, n/30, FOB shipping point. |
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Mar 15 |
Customer payment received for Mar 1 purchase less the Mar 7 return. |
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Mar 16 |
Several pieces of merchandise from the Mar 10 purchase are damaged. Ace’s manager negotiates with the supplier, agreeing to keep the items in exchange for a $500 allowance applied to Ace’s account. |
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Mar 18 |
Ace Company pays the $200 freight bill received when the mar 10 merchandise was delivered. |
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Mar 19 |
Ace Company pays for the Mar 10 purchase less the Mar 16 allowance |
Below is a sample transaction recorded in the journal using the periodic method and the perpetual method. This transaction is recorded using the same accounts for both the periodic and perpetual inventory systems. This will not always be the case. Lesson 8 Ch 6 Merchandising Transaction LO6.7provides a list of transactions that result in the same entry for both methods and explains the transactions that are recorded differently.
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Periodic Inventory System Journal Entries |
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Perpetual Inventory System Journal Entries |
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Date |
Description |
Debit |
Credit |
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Date |
Description |
Debit |
Credit |
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Sample |
Sales Returns & Allowances |
200 |
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Sample |
Sales Returns & Allowances |
200 |
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200 |
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Accounts Receivable |
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200 |
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Sales allowance issued for damaged merchandise. |
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Sales allowance issued for damaged merchandise. |
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