Journalizing the transactions for the month of July for ABC Company using the perpetual and periodic inventory systems is as follows:
<h3>Journal Entries under the Perpetual Method:</h3>
July 1: Debit Inventory Birr 72,000
Credit Accounts Payable (XYZ Manufacturers) Birr 72,000
FOB destination, terms 2/10, n/30. The merchandise has a list price of Birr 150 per unit with a trade discount of 20%.
July 3: Debit Accounts Receivable (Satchel World) Birr 8,200
Credit Sales Revenue Birr 8,200
Debit Cost of goods sold Birr 5,400
Credit Inventory Birr 5,400
July 9: Debit Accounts Payable (XYZ Manufacturers) Birr 72,000
Credit Cash Birr 70,560
Credit Cash Discounts Birr 1,440
July 12: Debit Cash Birr 8,200
Credit Accounts Receivable (Satchel World) Birr 8,200
July 17: Debit Accounts Receivable (Lady GoGo) Birr 6,210
Credit Sales Revenue Birr 5,400
Credit Sales Tax Payable Birr 810
Subject to a sales tax of 15%.
Debit Cost of goods sold Birr 4,030
Credit Inventory Birr 4,030
July 18: Debit Inventory Birr 3,900
Credit Accounts Payable (Holiday Manufacturers) Birr 3,900
FOB shipping point, terms 1/10, n/30.
Debit Freight-in Birr 750
Credit Cash Birr 750
July 20: Debit Accounts Payable (Holiday Manufacturers) Birr 900
Credit Inventory Birr 900
For merchandise returned to Holiday Manufacturers.
July 21: Debit Cash Birr 6,210
Credit Accounts Receivable (Lady GoGo) Birr 6,210
July 22: Debit Accounts Receivable (Vagabond) Birr 6,400
Credit Sales Revenue Birr 6,400
Debit Cost of goods sold Birr 4,300
Credit Inventory Birr 4,300
July 30: Debit Accounts Payable (Holiday Manufacturers) Birr 3,000
Credit Cash Birr 3,000
July 31: Debit Sales Returns Birr 400
Credit Accounts Receivable (Vagabond) Birr 400
Debit Inventory Birr 280
Credit Cost of goods sold Birr 280
For merchandises returned costing Birr 280.
<h3>Journal Entries under the Periodic Method:</h3>
July 1: Debit Purchases Birr 72,000
Credit Accounts Payable (XYZ Manufacturers) Birr 72,000
FOB destination, terms 2/10, n/30. The merchandise has a list price of Birr 150 per unit with a trade discount of 20%.
July 3: Debit Accounts Receivable (Satchel World) Birr 8,200
Credit Sales Revenue Birr 8,200
July 9: Debit Accounts Payable (XYZ Manufacturers) Birr 72,000
Credit Cash Birr 70,560
Credit Cash Discounts Birr 1,440
July 12: Debit Cash Birr 8,200
Credit Accounts Receivable (Satchel World) Birr 8,200
July 17: Debit Accounts Receivable (Lady GoGo) Birr 6,210
Credit Sales Revenue Birr 5,400
Credit Sales Tax Payable Birr 810
Subject to a sales tax of 15%.
July 18: Debit Purchases Birr 3,900
Credit Accounts Payable (Holiday Manufacturers) Birr 3,900
FOB shipping point, terms 1/10, n/30.
Debit Freight-in Birr 750
Credit Cash Birr 750
July 20: Debit Accounts Payable (Holiday Manufacturers) Birr 900
Credit Purchases Return Birr 900
For merchandise returned to Holiday Manufacturers.
July 21: Debit Cash Birr 6,210
Credit Accounts Receivable (Lady GoGo) Birr 6,210
July 22: Debit Accounts Receivable (Vagabond) Birr 6,400
Credit Sales Revenue Birr 6,400
July 30: Debit Accounts Payable (Holiday Manufacturers) Birr 3,000
Credit Cash Birr 3,000
July 31: Debit Sales Returns Birr 400
Credit Accounts Receivable (Vagabond) Birr 400
<h3>Transaction Analysis under the Perpetual Method:</h3>
July 1: Inventory Birr 72,000 Accounts Payable (XYZ Manufacturers) Birr 72,000
FOB destination, terms 2/10, n/30. The merchandise has a list price of Birr 150 per unit with a trade discount of 20%.
July 3: Accounts Receivable (Satchel World) Birr 8,200 Sales Revenue Birr 8,200
Cost of goods sold Birr 5,400 Inventory Birr 5,400
July 9: Accounts Payable (XYZ Manufacturers) Birr 72,000 Cash Birr 70,560 Cash Discounts Birr 1,440
July 12: Cash Birr 8,200 Accounts Receivable (Satchel World) Birr 8,200
July 17: Accounts Receivable (Lady GoGo) Birr 6,210 Sales Revenue Birr 5,400 Sales Tax Payable Birr 810
Subject to a sales tax of 15%.
Cost of goods sold Birr 4,030 Inventory Birr 4,030
July 18: Inventory Birr 3,900 Accounts Payable (Holiday Manufacturers) Birr 3,900 FOB shipping point, terms 1/10, n/30.
Freight-in Birr 750 Cash Birr 750
July 20: Accounts Payable (Holiday Manufacturers) Birr 900 Inventory Birr 900 For merchandise returned to Holiday Manufacturers.
July 21: Cash Birr 6,210 Accounts Receivable (Lady GoGo) Birr 6,210
22: Accounts Receivable (Vagabond) Birr 6,400 Sales Revenue Birr 6,400
Cost of goods sold Birr 4,300 Inventory Birr 4,300
July 30: Accounts Payable (Holiday Manufacturers) Birr 3,000 Cash Birr 3,000
July 31: Sales Returns Birr 400 Accounts Receivable (Vagabond) Birr 400
Inventory Birr 280 Cost of goods sold Birr 280
For merchandises returned costing Birr 280.
<h3>Transaction Analysis under the Periodic Method:</h3>
Similar with some minor differences.
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