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Perpetual Inventory

The following events pertain to XYC for Jan 2007. The company uses the perpetual inventory method. Record the following events in the general journal.
1.) Jan 3rd purchased 40,000 of merchandise inventory from supplier, Kelly Distributors Inc. The terms of the purchase: 2/10, n/30 and FOB shipping point.
2.) Jan 5th paid 900 cash for freight to trucking co. to have goods shipped from Kelly Distributors inc.
3.) Jan 7th (a)Sold merchandise for 8,000 to a customer on account (b) The merchandise sold had cost 5,600
4.) Jan 10. Returned 5,000 (list price) of defective merchandise to Kelly Distributors Inc.
5.) Jan 11. Paid amount due to Kelly Distributors for merchandise purchased on Jan 3.
6.) Jan 12 (a) accepted a return of 1,500 of the goods sold on Jan 7. (b) The cost of these goods was 1,100

Solution Preview

1.) Jan 3rd purchased 40,000 of merchandise inventory from supplier, Kelly Distributors Inc. The terms of the purchase: 2/10, n/30 and FOB shipping point.

Jan 3 Merchandise Inventory Dr 40,000
Accounts Payable Cr 40,000
To record the purchase of merchandise on account

2.) Jan 5th paid 900 cash for freight to trucking co. to have goods shipped from Kelly Distributors inc.

Jan 5 Merchandise Inventory Dr 900
Cash Cr ...

Solution Summary

The solution explains the journal entry for various transactions under perpetual inventory system

$2.19