Question

b. Record each of the following transactions using the perpetual met prometual method. a $5,000 of goods on account. The freight charges on the goods were maged and were returned to the seller; the seller reduced the May 6: Purchased $5,000 of goods on account. The $50. Goods costing S35 were damaged and were returned to the seller, the amount owed by $35. May 9 New Sales found that items costin sos were not ordered and could not be used. New Sales found that iter New Sales returned the items, and the supplier reduced the amount owed. May 26 Paid the supplier the amount owed. Perpetual Inventory Entries: c. What information can you get from the periodic system that you cannot get from the perpetual system? What information can you get from the perpetual system that you cannot get from the periodic system?

Answer 1

b. Perpetual inventory entries:

Date	General Ledger	Debit	Credit
May'6	Inventory	5,000
	Accounts Payable		5,000
For purchase of goods on account
Date	General Ledger	Debit	Credit
May'6	Direct expenses/work in process	50
	Accounts Payable		50
For freight charges on purchase of goods
Date	General Ledger	Debit	Credit
May'6	Accounts Payable	35
	Inventory		35
For purchase returns
Date	General Ledger	Debit	Credit
May'26	Accounts Payable	5,015
	Cash		5,015
For cash paid to supplier

c. Below information you can get from periodic system that you cannot get from the perpetual system.

1. There is no cost of goods sold account entry at all in an accounting period until such time as there is a physical count, which is then used to derive the cost of goods sold.
2. All purchases are recorded into a purchases asset account, and there are no individual inventory records to which any unit-count information could be added.

Below information you can get from perpetual system that you cannot get from the periodic system.

1. There are continual updates to either the general ledger or inventory ledger as inventory-related transactions occur
2. There are continual updates to the cost of goods sold account as each sale is made.