Inventory: These are goods which are owned by company and expected to sell in its normal course of business Merchandise: The goods are referred as merchandise which the company purchases and resells the same goods to customers Merchandiser: The company who business is to buy the merchandise at purchases cost and sell the same merchandise at higher price which is sales price and earns profit . Merchandiser can be categorized as wholesaler and retailer Perpetual Inventory System: Each merchandise purchase and sales cost are recorded and updated continuously for all merchandise. In perpetual Inventory system if merchandise is sold. The company determines the cost of goods sold and passes an accounting entry. It will debit “Cost of goods sold” and credit “Merchandise Inventory” . If merchandise is purchased it will pass the accounting entry by debiting “Merchandise Inventory” and crediting “Account payable” if purchases on credit or “Cash or Bank “if paid Cash or Cheque for the purchases Closing entries for merchandisers in perpetual inventory system : At the end of accounting period all temporary accounts are transferred to income summary and then the balances income summary is transferred to owners capital To Prepare: To record journal entries in the books of Kumi Emiko for following transactions The adjusting entries The closing entries

Question

Want to see the full answer?

Answer 1

Question

Chapter 5, Problem 11E

To determine

Concept Introduction:

Inventory: These are goods which are owned by company and expected to sell in its normal course of business

Merchandise: The goods are referred as merchandise which the company purchases and resells the same goods to customers

Merchandiser: The company who business is to buy the merchandise at purchases cost and sell the same merchandise at higher price which is sales price and earns profit . Merchandiser can be categorized as wholesaler and retailer

Perpetual Inventory System: Each merchandise purchase and sales cost are recorded and updated continuously for all merchandise. In perpetual Inventory system if merchandise is sold. The company determines the cost of goods sold and passes an accounting entry. It will debit “Cost of goods sold” and credit “Merchandise Inventory” . If merchandise is purchased it will pass the accounting entry by debiting “Merchandise Inventory” and crediting “Account payable” if purchases on credit or “Cash or Bank “if paid Cash or Cheque for the purchases

Closing entries for merchandisers in perpetual inventory system: At the end of accounting period all temporary accounts are transferred to income summary and then the balances income summary is transferred to owners capital

To Prepare:

To record journal entries in the books of Kumi Emiko for following transactions

The adjusting entries

The closing entries

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

General Accounting Question give true answer

A company performed $25,905 of services and received $9,000 in cash with the remaining amount to be paid in 60 days with no interest. What would the effect of this transaction be on the company's current month- end accounting equation? A. $25,905 increase in Assets; No effect on Liabilities; $25,905 increase in Stockholders' Equity. B. $16,905 increase in Assets; No effect on Liabilities; $16,905 increase in Stockholders' Equity. C. $25,905 increase in Assets; $25,905 increase in Liabilities; No effect on Stockholders' Equity. D. $9,000 increase in Assets; $16,905 decrease in Liabilities; $25,905 increase in Stockholders' Equity.

Give correct option for following data of this general accounting question