Q6. Perpetual Inventory System
Entity 6A uses a perpetual inventory system. Prepare journal entries to record the following transactions.
[Information for Q6]
Entity 6A had the following transactions in May:
(1) May 1, purchased 600 units of merchandise at $15 per unit cost on credit.
(2) May 16, sold 200 units of merchandise at $20 per unit price on credit
(3) May 31, counted 400 units of merchandise inventory by a physical inventory taking.
1. May 1
To record the purchase of 600 units of merchandise
600 units x $15 = $9,000
2. May 16
To record sales revenue
200 units x $20 = $4,000
To record cost of goods sold
|Cost of goods sold||3,000|
200 units x $15 = $3,000
3. May 31
Under a perpetual inventory system, inventory account balance is updated as transactions occur and no journal entry is required at the end of period.
a. Ending balance of merchandise inventory
= Purchases – Cost of goods sold
= $9,000 -$3,000 = $6,000
b. Cost of goods sold
= 200 units x $15 = $3,000