Question

Ashley Company engaged in the following transactions in August 20x1:

Aug. 4 Purchased merchandise on account at a cost of $ 14,000; terms 2/10, n/30, FOB shipping Point.

Aug. 6 Paid freight of $200 on the purchase of August 4.

Aug. 10 Sold goods for $10,000; terms 2/10, n/30. The cost of goods sold is $9,000.

Aug. 12 Returned to the vendor, $2,400 worth of the merchandise purchased on August 4.

Aug. 14 Paid the amount due on the purchase of August 4.

Requirement:

1) Using the template, prepare journal entries for Ashley:

i) Periodic system.

ii) Perpetual system.

Ashley Company
Journal Entries
Date		Account Name	Periodic System			Perpetual System
August			Debit	Credit		Debit	Credit
4
6
10	a)
	b)
12
14

Answer 1

Periodic inventory system
Ashley Company Journal entries for the month of August 20x1($)

Aug 4- To record purchases

Dr. Purchases Account 13720

Dr. Purchases Discount Received 280

Cr. Accounts Payable 14000

Aug 6- To record Freight charges on purchases

Dr. Purchases 200

Cr. Bank Account 200

Aug 10- To record sale of goods

Dr. Account Receivable 10000

Cr. Sales Account 10000

Aug12- To record Returns to the vendor

Dr. Accounts Payable 2400

Cr. Returns outward Account 2400

Aug 14- To record payment

Dr Accounts payable(14000-280-2400) 11320

Cr. bank account 11320

2.Perpetual inventory system
Ashley Company Journal entries for the month of August 20x1($)

Aug 4

Dr. Purchases Account 14000

Cr. Accounts Payable account 14000

Aug 6

Dr. Cost of goods sold 400

Cr. Bank account 400

Aug 10

Dr. Accounts Receivable 10000

Cr. Sales Account 10000

Dr. Cost of goods sold 9000

Cr. Inventory Account 9000

Aug 12

Dr. Accounts payable 2400

Cr. Inventory Account 2400

Aug 14

Dr. Account payable 11320

Cr. Bank account 11320