| Following are the merchandising transactions for Chilton Systems. |
| 1. |
On
November 1, Chilton Systems purchases merchandise for $1,300 on credit
with terms of 2/5, n/30, FOB shipping point; invoice dated November 1.
|
| 2. | On November 5, Chilton Systems pays cash for the November 1 purchase. |
| 3. |
On November 7, Chilton Systems discovers and returns $105 of defective merchandise purchased on November 1 for a cash refund.
|
| 4. |
On November 10, Chilton Systems pays $65 cash for transportation costs with the November 1 purchase.
|
| 5. |
On November 13, Chilton Systems sells merchandise for $1,404 on credit. The cost of the merchandise is $702.
|
| 6. |
On
November 16, the customer returns merchandise from the November 13
transaction. The returned items are priced at $210 and cost $105; the
items were not damaged and were returned to inventory.
|
|
Journalize the above merchandising transactions for Chilton Systems assuming it uses a perpetual inventory system.
|
Merchandise inventory is goods that have been acquired by a distributor, wholesaler, or retailer from suppliers, with the intent of selling the goods to third parties.
ReplyDeleteThis can be the single largest asset on the balance sheet of some types of businesses.
If these goods are sold during an accounting period, then their cost is charged to the cost of goods sold, and appears as an expense in the income statement in the period when the sale occurred.
If these goods are not sold during an accounting period, then their cost is recorded as a current asset, and appears in the balance sheet until such time as they are sold.