1) The Perpetual Inventory system counts merchandise in real time. As soon as something is purchased, it is recorded in the system. As soon as something is sold, it is removed from the system keeping a real time count of inventory. it also record all kind of purchase or sales returns which helps to maintaine of correct or accurate inventory or sales record. On the other hand Gross Sales Method give gross value of sales Under gross method, the sales transaction is recorded at gross price without deducting the amount of discount offered or sales return if any. So To get the accurate value of sales Perpetual Net sales method is using.
Net Sales = Gross Sales - (Sales Discount + Sales Return + Sales Allowance )
2) Apr1 XYZ Co. Sells $4000 Merchandise To ABC Co. , 2/10, n/30,.
Apr 11 ABC Co. pays for the Apr 1 purchase from XYZ Co.
Journal Entry In The Books Of Seller
Apr 1 Accounts Receivable Dr $4000
To Sales $4000
( Being Sales made )
Apr 11 Cash Dr $3940
Sales Discount Dr $60
To Accounts Receivable $4000
( Being Discount allowed 2% on $4000)
3) We Can Take Above Example for Understand this :
Apr1 XYZ Co. Sells $4000 Merchandise To ABC Co. , 2/10, n/30,.
Apr 12 ABC Co. pays for the Apr 1 purchase from XYZ Co.
Apr 1 Accounts Receivable Dr $4000
To Sales $4000
( Being Sales made )
Apr 11 Cash Dr $4000
To Accounts Receivable $4000
( Being payment recd )
As In this Case Buyer pay after the discount date so he/she will not allow to get the discount on invoice value and has to pay the full amount of the purchase.
2. Explain the reason for using the perpetual net sales method of recording sales versus the...
When a sale occurs and a company is using the gross method of recording sales discounts, the sales voice (with credit terms granting a discount for early payment) will be recorded at the O a seller's cost of the merchandise. O b. gross amount of the invoice O c. amount of the discount. O d. net amount of the invoice after the discount
Check my work 4 Exercise 4-6 Recording sales, purchases, and cash discounts-buyer and seller LO P1, P2 Santa Fe Retailing purchased merchandise "as is" (with no returns) from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,300. The merchandise had cost Mesa $16,573. Assume that both buyer and seller use a perpetual inventory system and the gross method. ints 1. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the...
4 Exercise 4-6 Recording sales, purchases, and cash discounts-buyer and seller LO P1, P2 Santa Fe Retailing purchased merchandise "as is" (with no returns) from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,300. The merchandise had cost Mesa $16,573. Assume that both buyer and seller use a perpetual inventory system and the gross method. ints 1. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and...
4 Exercise 4-6 Recording sales, purchases, and cash discounts-buyer and seller LO P1, P2 Santa Fe Retailing purchased merchandise "as is" (with no returns) from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,300. The merchandise had cost Mesa $16,573. Assume that both buyer and seller use a perpetual inventory system and the gross method. ints 1. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and...
please help, last person got it wrong! Assuming that Flounder uses the perpetual method for recording merchandise transactions, record the purchase, return, and payment using the gross method. (If no entry is required, select "No entry for the account titles and enter o for the amounts. Round answers to decimal places g. 6,578 Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanati Feb. 11 (Inventory Accounts Payable Accounts Payable TINTOTD:...
Cornerstone Exercise 6-21 (Algorithmic) Recording Sales Transactions Mathis Company and Reece Company use the perpetual inventory system. The following transactions occurred during the month of April: a. On April 1, Mathis Company purchased merchandise on account from Reece Company with credit terms of 2/10, n/30. The selling price of the merchandise was $3,500, and the cost of the merchandise sold was $2,450. b. On April 1, Mathis paid freight charges of $100 cash to have the goods delivered to its...
Please Create a Sales journal using the perpetual method for dates June 4th June 15th June 18th June 21st The business uses a simplified specific identifica Cost of Goods Sold: u policy by applying a 48 percent The sales price is provided for studen markup to arrive at the actual sales price tbe for ea entification costing sale based on this markup policy. (HINT: This method to calculate the cos sold was introduced in Chapter 4.) combined local and state...
Using the gross method for recording sales, sales are recorded at the amount of the sale less any sales discounts true or false?
PURCHASE DISCOUNTS INVENTORY NET METHOD Please explain the following transactions for periodic and perpetcual Discounts using the Net Method. Receipt of Invoice Periodic Dr. Purchases 980 Cr. Accounts Payable 980 Perpetual Dr. Inventory 980 Cr. Accounts Payable 980 Payment within discount period Periodic Dr. Accounts Payable 980 Cr. Cash 980 Perpetual Dr. Inventory 980 Cr. Cash 980 Payment after discount period Periodic Dr. Accounts Payable 980 Dr. Interest Expense 20 Cr. Cash 1000 Perpetual Dr. Accounts Payable 980 Cr. Interest...
Exercise 4-17A Recording sales, purchases, and discounts: buyer and seller- periodic LO P5 Santa Fe Retailing purchased merchandise “as is” (with no returns) from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $22,700. The merchandise had cost Mesa $15,481. Assume that both buyer and seller use a perpetual inventory system and the gross method. 1. Prepare entries that the buyer should record for (a) the purchase, (b) cash payment within the discount period, and (c)...