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anyanavicka [17]
3 years ago
13

Beginning inventory $ 34,000 Inventory purchases (on account) 164,000 Freight charges on purchases (paid in cash) 19,000 Invento

ry returned to suppliers (for credit) 21,000 Ending inventory 39,000 Sales (on account) 259,000 Cost of inventory sold 157,000 Required: Applying both a perpetual and a periodic inventory system, prepare the journal entries that summarize the transactions that created these balances. Include all end-of-period adjusting entries indicated.
Business
1 answer:
sukhopar [10]3 years ago
6 0

Answer:

<u>Journal entries - Perpetual inventory system</u>

<em>Inventory purchases (on account) 164,000</em>

Inventory $ 164000(debit)

Trade Payables $ 164000 (credit)

<em>Freight charges on purchases (paid in cash) 19,000</em>

Freight Charges $ 19000 (debit)

Bank $19000 (credit)

*****Freight Charges forms part of cost of Inventory (IAS 2) therefore write off freight cost to Inventory Account****

Inventory $19000 (debit)

Freight Charges $ 19000 (credit)

<em>Inventory returned to suppliers (for credit) 21,000</em>

Trade Payable $ 21000 (debit)

Inventory $21000(credit)

<em>Sales (on account) 259,000</em>,

Trade Receivables $ 259000 (debit)

Revenue $259000(credit)

<em>Cost of inventory sold 157,000</em>

Cost of Sales $157000 (debit)

Inventory $157000 (credit)

<u>Journal entries - Periodic inventory system</u>

<em>Inventory purchases (on account) 164,000</em>

Inventory $ 164000(debit)

Trade Payables $ 164000 (credit)

<em>Freight charges on purchases (paid in cash) 19,000</em>

Freight Charges $ 19000 (debit)

Bank $19000 (credit)

*****Freight Charges forms part of cost of Inventory (IAS 2) therefore write off freight cost to Inventory Account****

Inventory $19000 (debit)

Freight Charges $ 19000 (credit)

<em>Inventory returned to suppliers (for credit) 21,000</em>

Trade Payable $ 21000 (debit)

Inventory $21000(credit)

<em>Sales (on account) 259,000</em>,

Trade Receivables $ 259000 (debit)

Revenue $259000(credit)

<em>Cost of inventory sold 157,000</em>

Cost of Sales $157000 (debit)

Inventory $157000 (credit)

Explanation:

<em>Inventory purchases (on account) 164,000</em>

Recognise an Asset - Inventory and a liability - Account payable

<em>Freight charges on purchases (paid in cash) 19,000</em>

Recognise an expense - Freight Charges and de-recognise asset - Bank

*****Freight Charges forms part of cost of Inventory (IAS 2) therefore write off freight cost to Inventory Account****

Derecognise expense- Freight and recognise an asset - Inventory

<em>Inventory returned to suppliers (for credit) 21,000</em>

De-recognise Asset - Inventory and De-recognise Liability - Account Payable

<em>Sales (on account) 259,000</em>,

Recognise Asset - Trade Receivable and Recognise Revenue

<em>Cost of inventory sold 157,000</em>

Recognise expense - Cost of Sale in Profit and Loss and De-recognise Asset- Inventory

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Question Completion:

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A. To record receipt of unearned revenue

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Answer:

Journal Entries with appropriate descriptions:

Insurance Expense 1,900

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G. To record this period's use of a prepaid expense

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C. To record payment of an accrued expense

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Cash 3,200

H. To record payment of a prepaid expense

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E. To record an accrued expense

Interest Receivable 1,900

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F. To record an accrued revenue

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Accounts Receivable (from consulting) 3,900

D. To record receipt of an accrued revenue

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A. To record receipt of unearned revenue

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Interest Receivable 4,300

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G. To record this period's use of a prepaid expense

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E. To record an accrued expense

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Accumulated Depreciation 1,300

I To record this period's depreciation expense

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Professional Fees Earned 1,900

B. To record this period's earning of prior unearned revenue

Explanation:

Journal entries are usually recorded to adjust revenue and expenses to the accrual basis of accounting and to match expenses to the period's revenue and vice versa.  Short narrations are provided after recording each transaction.  The purpose is to provide some descriptions of the transaction so that it can be understood by another person reviewing the records.

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Explanation:

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first we determine an appropriate z value.

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we substitute the value

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