Question

CV 5.1 Chapter 5 Canvas Homework: Inventory Journal Entries under Perpetual and Periodic Inventory Systems The following transactions occurred in January 2019 for Atlantic Corp: Jan 3 Purchased inventory on account from Cooley Wholesalers, $6,500, Terms 2/15, n/30. Jan 3 Paid shipping bill of $100 related to the Jan 3 purchase. Jan 6 Returned $1,500 of the inventory purchased from Cooley Wholesalers on Jan 3. Jan 8 Sold inventory to Herrick Co, $8,000, on account terms 2/10, n/30. The cost of this inventory was $3,700. Jan 9 Purchased inventory on account from Tyson Inc, $3,600, terms 3/10, n/EOM. Jan 10 Paid Cooley Wholesalers. Jan 12 Received payment from Herrick Co. Jan 13 After a negotiation regarding slightly damaged goods, received a $500 allowance from Tyson Inc. Jan 15 sold inventory to Jasper Inc, $2,700, on account, terms 2/10, n/30. The cost of this inventory was $1,500. Jan 15 Paid shipping bill of $50 related to the Jan 15 sale and delivery to the customer. Jan 22 Paid Tyson Inc. Jan 23 Jasper Inc returned $300 of the inventory sold on Jan 15. The cost of this inventory was $120. The inventory was placed back into sellable inventory. Jan 28 Received payment from Jasper Inc. Requirements: 1) Record the journal entries for the above transactions assuming that Atlantic Corp uses a perpetual Inventory system 2) Record the journal entries for the above transactions assuming that Atlantic Corp uses a periodic inventory system.

Answer 1

Solution:

Part 1 - Journal Entry under Perpetual Inventory System

Date	General Journal	Debit	Credit
Jan.3	Inventory (6,500*98% net of discount)	$6,370
	Accounts Payable - Cooley Wholesalers		$6,370
	(To record Purchase of inventory on account net of discount)
Jan.3	Inventory	$100
	Cash		$100
	(To record payment of shipping bill)
Jan.6	Accounts Payable - Cooley Wholesalers (1500*98% net of discount)	$1,470
	Inventory		$1,470
	(To record purchase return net of discount)
Jan.8	Cost of Goods Sold	$3,700
	Inventory		$3,700
	(To record cost of goods sold)
	Accounts Receivable - Herrick Co	$7,840
	Sales Revenue ($8,000*98% net of discount)		$7,840
	(To record sale of goods on account net of discount)
Jan.9	Inventory (3600*97% net of discount)	$3,492
	Accounts Payable - Tyson Inc		$3,492
	(To record purchase on account net of discount)
Jan.10	Accounts Payable - Cooley Wholesalers ($6,370 - Return 1,470)	$4,900
	Cash		$4,900
	(To record payment of Cooley Wholesalers)
Jan.12	Cash	$7,840
	Accounts Receivable - Herrick Co		$7,840
	(To record payment receipt from Herrick Co)
Jan.13	Accounts Payable - Tyson Inc	$500
	Inventory		$500
	(To record allowance received from Tyson Inc for damaged goods)
Jan.15	Cost of Goods Sold	$1,500
	Inventory		$1,500
	(To record cost of goods sold)
	Accounts Receivable - Jasper Inc.	$2,646
	Sales Revenue ($2700*98% net of discount)		$2,646
	(To record sale of goods on account net of discount)
Jan.15	Freight Cost	$50
	Cash		$50
	(To record shipping bill paid)
Jan.22	Accounts Payable - Tyson Inc (3,492 - 500)	$2,992
	Cash		$2,992
	(To record payment on account)
Jan.23	Inventory	$120
	Cost of goods sold		$120
	(To record sales return)
	Sales Return (300*98% net of discount)	$294
	Accounts Receivable - Jasper Inc.		$294
	(To record sales return net of discount)
Jan.28	Cash	$2,352
	Accounts Receivable - Jasper Inc. (2646 - 294)		$2,352
	(To record payment received)

Part 2 - Journal Entry under Periodic Inventory System

Date	General Journal	Debit	Credit
Jan.3	Purchases / Inventory	$6,500
	Accounts Payable - Cooley Wholesalers		$6,500
	(To record Purchase of inventory on account)
Jan.3	Freight Cost	$100
	Cash		$100
	(To record payment of shipping bill)
Jan.6	Accounts Payable - Cooley Wholesalers	$1,500
	Purchase Return		$1,500
	(To record purchase return)
Jan.8	Accounts Receivable - Herrick Co	$8,000
	Sales Revenue		$8,000
	(To record sale of goods on account)
Jan.9	Purchases / Inventory	$3,600
	Accounts Payable - Tyson Inc		$3,600
	(To record purchase on account )
Jan.10	Accounts Payable - Cooley Wholesalers ($6500 - 1500)	$5,000
	Purchase Discount (5000*2%)		$100
	Cash		$4,900
	(To record payment of Cooley Wholesalers)
Jan.12	Cash	$7,840
	Sales Discount (8000*2%)	$160
	Accounts Receivable - Herrick Co		$8,000
	(To record payment receipt from Herrick Co)
Jan.13	Accounts Payable - Tyson Inc	$500
	Purchase Discount		$500
	(To record allowance received from Tyson Inc for damaged goods)
Jan.15	Accounts Receivable - Jasper Inc.	$2,700
	Sales Revenue		$2,700
	(To record sale of goods on account)
Jan.15	Freight Cost	$50
	Cash		$50
	(To record shipping bill paid)
Jan.22	Accounts Payable - Tyson Inc (3,600 - 500)	$3,100
	Purchase Discount (3100*3%)		$93
	Cash		$3,007
	(To record payment on account)
Jan.23	Sales Return	$300
	Accounts Receivable - Jasper Inc.		$300
	(To record sales return)
Jan.28	Cash	$2,352
	Sales Discount (2400*2%)	$48
	Accounts Receivable - Jasper Inc. (2700-300)		$2,400
	(To record payment received)

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