Question

PARRISH 7-2 SALE OF INVENTORY Please complete the following periodic/perpetual inventory transactions. Please be certain to give a correct answer and use the correct terms.

Perpetual Method

5/15 Sold inventory that had cost us $300 for $525 on account. Freight to get the merchandise to our customer cost us $50.
5/20 Accepted return of merchandise which was wrong color for the customer. We had sold the merchandise for $72; our cost was $56
5/29 Shipped merchandise that had cost us $790 to a customer for $1050. The customer agreed to pay us in 30 days
5/30 Received a check for 5/15 sale

Record these transactions using the Perpetual Method.

Answer 1

Journal Entries (Perpetual):

Date	Account title and Explanation	Debit	Credit
5/15	Accounts receivable	$525
	Sales revenue		$525
	[To record sales revenue]
	Cost of goods sold	$300
	Inventory		$300
	[To record cost of goods sold]
	Freight-out	$50
	Cash		$50
	[To record payment of freight]
5/20	Sales returns and Allowance	$72
	Accounts receivable		$72
	[To record sales returns]
	Inventory	$56
	Cost of goods sold		$56
	[To record cost of goods sold]
5/29	Accounts receivable	$1,050
	Sales revenue		$1,050
	[To record sales revenue]
	Cost of goods sold	$790
	Inventory		$790
	[To record cost of goods sold]
5/30	Cash	$453
	Accounts receivable [$525-$72 returns]		$453
	[To record collections from customers]

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