Question

Howard, Inc. is a merchandising company that began operations on January 1, 2019. During January, the following inventory transactions occurred January Transactions: Jan. Howard purchased merchandise on account for $12,000. 11 Howard returned some of the merchandise purchased on Jan. 11, and the supplier credited Howard's account. The 15 cost of the merchandise retuned was $700 20 Howard sold merchandise that cost $3,500 for $5,000 in cash. Required: Assume that Howard uses a perpetual inventory system. Prepare the jounal entries to record the January inventory transactions. 1 2. Assume that Howard uses a periodic inventory system. Prepare the journal entries to record the January inventory transactions. Be sure to include any adjusting entries necessary Cunluata thie etatement

Answer 1

Journal Entries:

1)	Perpetual Inventory System:
Date	Account Titles and Explanations	Debit	Credit
Jan. 11	Merchandise Inventory	$12,000
	Accounts Payable		$12,000
	(To record the purchase of merchandise inventory on account)
Jan. 15	Accounts Payable	$700
	Merchandise Inventory		$700
	(To record the return of merchandise inventory purchased on account)
Jan. 20	Cash	$5,000
	Sales Revenue		$5,000
	(To record the sale of merchandise inventory for cash)
	Cost of Goods Sold	$3,500
	Merchandise Inventory		$3,500
	(To record the cost of goods sold)
1)	Periodic Inventory System:
Date	Account Titles and Explanations	Debit	Credit
Jan. 11	Purchases	$12,000
	Accounts Payable		$12,000
	(To record the purchase of merchandise inventory on account)
Jan. 15	Accounts Payable	$700
	Purchase Returns		$700
	(To record the return of merchandise inventory purchased on account)
Jan. 20	Cash	$5,000
	Sales Revenue		$5,000
	(To record the sale of merchandise inventory for cash)
	Adjusting Entries:
Date	Account Titles and Explanations	Debit	Credit
Jan. 31	Merchandise Inventory	$11,300
	Purchases ($12,000 - $700)		$11,300
	(To record the closing of purchase account to merchandise inventory account)
	Cost of Goods Sold	$3,500
	Merchandise Inventory		$3,500
	(To record the cost of goods sold)