Question

A company uses a perpetual system to record inventory transactions. The company purchases inventory on account on February 9, 2021, for $57,000 and then sells this inventory on account on March 7, 2021, for $79,000.Record the transactions for the purchase and sale of the inventory.

Answer 1

Answer:

February 9, merchandise purchased on account:

Dr Merchandise inventory 57,000

    Cr Accounts payable 57,000

March 7, merchandise sold on account

Dr Accounts receivable 79,000

    Cr Sales revenue 79,000

Dr Cost of goods sold 57,000

    Cr Merchandise inventory 57,000

Explanation:

Since we are not told the date when the company pays for the purchased merchandise, we can assume any date of February to record the payment:

Dr Accounts payable 57,000

    Cr Cash 57,000

The same for the collection of the sales account:

Dr Cash 79,000

    Cr Accounts receivable 79,000