Question

Accounting records for Red Deer Tire Ltd. yield the following data for the year ended December 31, 2017 amounts in thousands) F: (Click the icon to view the accounting records.) Requirements 1. Journalize Red Deer Tire's inventory transactions for the year under (a) perpetual system and (b) the periodic system. Show all amounts in thousands 2. What differences do you notice in the journal entries between the perpetual system and the periodic system? 3. Report ending inventory, sales, cost of goods sold, and gross profit on the appropriate financial statement (amounts in thousands) assuming the perpetual inventory system is used. Requirement 1a. Journalize Red Deer Tire's inventory transactions for the year under the perpetual system. (Record debits first, then credits. Explanations are not required. Show all amounts in thousands.) The first transaction is the purchase of inventory. Record the entry. Journal Entry Date Accounts December 31 Debit Credit The next transaction is the sale of inventory. Record the entry. (Do not yet record the cost related to the sale. We do this in the next journal entry.) Journal Entry Date Accounts Debit Credit December 31 The last entry is recording the cost of inventory. Record the entry. Journal Entry Accounts Debit Credit Date December 31 Choose from any list or enter any number in the input fields and then continue to the next question.

Answer 1

Answer Peupetyal Inventory System Perpebyal Inventory system is the most efficient System of invoglovy valuation Malghinance. In these system, the complete records of inflows 991 oyli low of inventory are maintained. There is connect walmation of coditos queglory is f ille in these system Perjodie Inventory system There are no records of inventory are maintained in these ponjolie inventang system. Inventory is uglyer either on the basis of gross profit nethed or physjaal count at the end of perjol is tyhen , I Joyigal Envies of inventory 699sqcljení assuming Ped Teer 14. uses G) Perpetual Inventory system Arge in The 1994 Partjulyve odiuch auding Purchase of Inventory Merchandit Inventory Ak - on 1com 1600 - To Accounts Payable Ak (Belog joventory prichased on accounty Sale of Inventory 0 415 Goh ale _(2300 x 18 %) Accounts Recenoble Ale (23007 82) 1886 2300 $320 $310 To Sales Revenue Ale (Being gools sold on cash as well as credit by sis) 131. Gost of Iquen fouy - pr Cost of Goods soll Alo - 1470 To Merchandise Inventory Alc 1920 ceeing to record ost of enting) - Toty) Perjodic Igveg bory system Δη! - To Theo- - Partju Igrs abjt $) | wedi (9) I purchaie of Inventory Pyrehques A/c - Or 1600 To Accounts Payalle Alc reeing goods purchare on account) sale of Inventory Ovl 414 - Ovi 1886 co) | 1600 Cash Alo – Account Receivable s Ale – 1. To sales Revenue Mc. (Beis goots sóly on Gosh as well as credit basis) 2300 Toty 390 3900 2.

3 Difference Doticed in Joyrng) enlv's between the pepelyal and perjudic Inventory System. we have noticed the following sjillevegce M Perpetual Inventory system L periodic Inventory system In perpetual Inventory system, In Perjosic Inventory system, po Inventory account is used for I Rachque Account is used for the purchase of gools perchque of inventory. 2. In perpetual Joventory system, two journal entries are posted at the time of sale of inventory i → To record the sales Revenye of To Update Inventory Records in periodic Inventory Systeng, one journal entry is required at the time of sales sie to record the sales revenue E 3 profit Reporting Ending Inventory Sales, cost of Goods sold and gross finangal statement using perpetygl inventory syster Ending Inventory is reportel in Balance sheel where, Sales, cast of Goods sold and Gross are parts of income style.ment - Balance sheet (Part 1) omlash Gyrrent Assels Inventory (rito method) (lower of (ost-ov Mahel. Vgley 800 Partjullars - Toby Income Stylerzegl (Pashall وايه او - Sales cost Revenue of tools soll Gross Amr ($ 2300 (1420) profit 880