Explanation Perpetual Inventory System: Perpetual Inventory System refers to the inventory system that maintains the detailed records of every inventory transactions related to purchases, and sales on a continuous basis. It shows the exact on-hand-inventory at any point of time. Prepare journal entries to record the given transactions; assume that the Retail store B uses net method in a perpetual inventory system: Date Account Title & Explanation Debit ($) Credit($) November 20 Cash 400 Sales Revenue 400 (To record the goods sold to person C for cash) Cost of goods sold 300 Inventory 300 (To record the cost of goods sold incurred) November 25 Accounts receivable 3,880 Sales Revenue (2) 3,880 (To record the goods sold to person V on account) Cost of goods sold 2,500 Inventory 2,500 (To record the cost of goods sold incurred) November 28 Accounts receivable 5,820 Sales Revenue (4) 5,820 (To record the goods sold to N gym on account) Cost of goods sold 4,000 Inventory 4,000 (To record the cost of goods sold incurred) November 29 Sales revenue (6) 582 Accounts receivable 582 (To record the goods returned from N gym) Inventory 400 Cost of goods sold 400 (To record the cost of inventory returned) December 6 Cash (7) 5,238 Accounts Receivable 5,238 (To record the cash received from N gym and provide sales discount) December 30 Cash 4,000 Other revenue (1) 120 Accounts receivable (2) 3,880 (To record the cash received from person V) Table (1) Justification: For November 20: Cash is an asset and it increases the value of asset. Hence, debit the accounts receivable by $400. Sales revenue is a component of stock holders’ equity and it increases the value of stockholder’s equity. Hence, credit the sales revenue by $400. Cost of goods sold is a component of stockholders’ equity and it decreases the value of stockholder’s equity. Hence, debit cost of goods sold by $300. Inventory is an asset and it decreases the value of assets. Hence, credit inventory by $300. For November 25: Accounts receivable is an asset and it increases the value of asset. Hence, debit the accounts receivable by $3,880. Sales revenue is a component of stock holders’ equity and it increases the value of stockholder’s equity. Hence, credit the sales revenue by $3,880. Cost of goods sold is a component of stockholders’ equity and it decreases the value of stockholder’s equity. Hence, debit cost of goods sold by $2,500. Inventory is an asset and it decreases the value of assets. Hence, credit inventory by $2,500. For November 28 Accounts receivable is an asset and it increases the value of asset. Hence, debit the accounts receivable by $5,820. Sales revenue is a component of stock holders’ equity and it increases the value of stockholder’s equity. Hence, credit the sales revenue by $5,820. Cost of goods sold is a component of stockholders’ equity and it decreases the value of stockholder’s equity. Hence, debit cost of goods sold by $4,000. Inventory is an asset and it decreases the value of assets. Hence, credit inventory by $4,000. For November 29: Sales revenue is a component of stock holders’ equity and it decreases the value of stockholder’s equity. Hence, debit the sales revenue by $582. Accounts receivable is an asset and it decreases the value of asset. Hence, credit the accounts receivable by $582. Inventory is an asset and it increases the value of assets. Hence, debit inventory by $400. Cost of goods sold is a component of stockholders’ equity and it increases the value of stockholder’s equity. Hence, credit cost of goods sold by $400. For December 6: Cash is an asset and it increases the value of asset. Hence, debit the cash account by $5,238. Accounts receivable is an asset and it decreases the value of asset. Hence, credit the accounts receivable by $5,238. For December 30: Cash is an asset and it increases the value of asset...

6th Edition

ISBN: 9781260664386

Author: PHILLIPS, LIBB

Publisher: MCG

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Chapter 6, Problem 28E

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Prepare journal entries to record the given transactions; assume that the Retail store B uses net method in a perpetual inventory system.

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Chapter 6, Problem 27E

Chapter 6, Problem 29E

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Prepare journal entries to record the given transactions; assume that the Retail store B uses net method in a perpetual inventory system.

Solution Summary: The author explains the perpetual inventory system that maintains the detailed records of every inventory transaction related to purchases, and sales on a continuous basis.

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Prepare journal entries to record the given transactions; assume that the Retail store B uses net method in a perpetual inventory system.

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