Purchase-related transactions using periodic inventory system
Selected transactions for Capers Company during October of the current year are listed in Problem 6-1A.
Instructions
Journalize the entries to record the transactions of Capers Company for October using the periodic inventory system.
Periodic Inventory System: It is a system in which the inventory is updated in the accounting records on a periodic basis such as at the end of each month, quarter or year. In other words, it is an accounting method which is used to determine the amount of inventory at the end of each accounting period.
Purchases is an activity of acquiring the merchandise inventory of a business.
To Record: The purchase transactions under periodic inventory system.
Record the journal entry in the books of Company C.
Journal Entry | ||||
Date | Account Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
October 1 | Purchases | 14,448 | ||
Accounts Payable | 14,448 | |||
(To record purchases of inventory on account) |
Table (1)
Explanation:
Record the journal entry for purchases of inventory along with freight charges.
Journal Entry | ||||
Date | Account Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
October 3 | Purchases | 9,950 | ||
Freight-In | 220 | |||
Accounts Payable | 10,170 | |||
(To record the payment of freight charges) |
Table (2)
Explanation:
Record the journal entry for purchases of inventory.
Journal Entry | ||||
Date | Account Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
October 4 | Purchases | 13,650 | ||
Accounts Payable | 13,650 | |||
(To record purchases of inventory on account) |
Table (3)
Explanation:
Record the journal entry for purchase returned.
Journal Entry | ||||
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
October 6 | Accounts Payable | 4,550 | ||
Purchases Returns and Allowances | 4,550 | |||
(To record the purchases return) |
Table (4)
Explanation:
Record the journal entry for the due amount paid.
Journal Entry | ||||
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
October 13 | Accounts Payable | 10,170 (1) | ||
      Purchase Discount | 199 (2) | |||
      Cash | 9,971 (3) | |||
(To record paying cash on purchases after discounts and returns) |
Table (5)
Working Notes:
Calculate accounts payable amount.
Purchases = $9,950
Freight paid = 220
Calculate purchase discount.
Accounts payable = $9,950
Discount percentage = 2%
Calculate cash paid.
Accounts payable = $9,950
Purchase discount = $199 (2)
Freight paid = 220
Explanation:
Record the journal entry for the due amount paid.
Journal Entry | ||||
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
October 14 | Accounts Payable | 9,100 (4) | ||
      Purchase Discount | 182 (5) | |||
      Cash | 8,918 (6) | |||
(To record paying cash on purchases after discounts and returns) |
Table (6)
Working Notes:
Calculate accounts payable amount.
Purchase = $13,650
Purchase returns = $4,550
Calculate purchase discount
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