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
