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Chapter 5: Q5-28RQ (page 295)

Describe the journal entry(ies) when recording a sale of inventory using the periodic inventory system.

Short Answer

Expert verified

In the periodic inventory system, thesales accountis credited to record the sale of inventory.

Step by step solution

01

Meaning of Sale of Inventory

The term “sale of inventory” refers to the transfer of ownership of inventory from the seller to the buyer. In this process, theseller is entitled to receive the consideration amount, and the buyer is responsible for making the payment against the inventory acquired.

02

Journal entry to record the sale of inventory under the periodic inventory system

Journal entry to record the sale of inventory is as follows:

Date

Accounts and Explanation

Debit ($)

Credit ($)

Accounts receivable

XXX

Sales

XXX

(To record the sale of inventory)

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Most popular questions from this chapter

Under the new revenue recognition standard, how is the sale of inventory recorded?

When granting a sales allowance is there a return of merchandise inventory from the customer? Describe the journal entry(ies) that would be recorded.

Triton Department Store uses a periodic inventory system. The adjusted trial balance of Triton Department Store at December 31, 2018, follows:

TRITON DEPARTMENT STORE

Adjusted Trial Balance

December 31, 2018

Balance

Account Title Debit Credit

Cash \(8,200

Accounts Receivable 84,600

Merchandise Inventory (beginning) 37,800

Office Supplies 850

Furniture 86,000

Accumulated Depreciation-Furniture \)18,500

Accounts Payable 29,400

Salaries Payable 2,300

Unearned Revenue 14,900

Notes Payable, long-term 36,000

Common Stock 60,000

Retained Earnings 22,850

Dividends 88,600

Sales Revenue 374,000

Purchases 295,000

Purchase Returns and Allowances 109,000

Purchase Discounts 6,400

Freight-In 300

Selling Expense 41,700

Administrative Expense 26,600

Interest Expense 3,700

Total \(673,350 \)673,350

Requirements

1. Prepare Triton Department Store’s multi-step income statement for the year ended December 31, 2018. Assume ending Merchandise Inventory is $36,300.

2. Journalize Triton Department Store’s closing entries.

Suppose Muddyriver.com sells 2,000 books on account for \(19 each (cost of these books is \)22,800), credit terms 1/20, n/45 on October 10, to The Salem Store. The Salem Store paid the balance to Muddyriver.com on October 22.

Requirements

1. Journalize the Salem Store’s October transactions.

2. Journalize Muddyriver.com’s October transactions. Assume Muddyriver.com uses the gross method to record sales revenue.

What is an invoice?
See all solutions

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