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PB6-5 (Supplement A) Recording Inventory Transactions Using Periodic and Perpetual Inventory Systems [LO 6-S1] [The following...

PB6-5 (Supplement A) Recording Inventory Transactions Using Periodic and Perpetual Inventory Systems [LO 6-S1] [The following information applies to the questions displayed below.] Sigfusson Supplies reported beginning inventory of 80 units, for a total cost of $2,000. The company had the following transactions during the month: Jan. 6 Sold 20 shovels on account at a selling price of $35 per unit. 9 Bought 10 shovels on account at a selling price of $25 per unit. 11 Sold 10 shovels on account at a cost of $40 per unit. 19 Sold 20 shovels on account at a selling price of $45 per unit. 27 Bought 10 shovels on account at a cost of $25 per unit. 31 Counted inventory and determined that 30 units were on hand. 1. Prepare the journal entries that would be recorded using periodic inventory system. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) 2. Prepare the journal entries that would be recorded using a perpetual inventory system, including any “book-to-physical” adjustment that might be needed. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Solutions

Expert Solution

1)Periodic Inventory method :

Date Account Debit credit
jan 6 Accounts receivable 700
sales revenue [20*35] 700
jan 9 Purchase 250
Accounts payable   [10*25] 250
Jan 11 Accounts receivable 400
sales revenue [10*40] 400
jan 19 Accounts receivable 900
sales revenue [20*45] 900
jan 27 purchase 250
aaccounts payable [10*25] 250
jan 31 cost of goods sold 1750
merchandise inventory [70*25] 1750

**Units available for sale 80 beginning +10+ 10 = 100

units sold : 100-30 = 70

cost of inventory sold : $ 25

2)Perpetual method :

Date Account Debit credit
jan 6 Accounts receivable 700
sales revenue 700
cost of goods sold 500
merchandise inventory [20*25] 500
jan 9 merchandise inventory 250
Accounts payable 250
jan 11 Accounts receivable 700
sales revenue 700
cost of goods sold 500
merchandise inventory [20*25] 500
jan 19 Accounts receivable 900
sales revenue 900
cost of goods sold 500
merchandise inventory [20*25] 500
jan 27 merchandise inventory 250
Accounts payable 250
jan 31 no entry

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