Purchase-related transactions using periodic inventory system
Selected transactions for Niles Co. during March of the current year are listed in Problem 6-1B.
Instructions
Journalize the entries to record the transactions of Niles Co. for March 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 for purchases of inventory along with freight charges.
Journal Entry | ||||
Date | Account Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
March 1 | Purchases | 43,250 | ||
Freight-In | 650 | |||
Accounts Payable | 43,900 | |||
(To record the payment of freight charges) |
Table (1)
Explanation:
Record the journal entry in the books of Company C.
Journal Entry | ||||
Date | Account Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
March 5 | Purchases | 19,175 | ||
Accounts Payable | 19,175 | |||
(To record purchases of inventory on account) |
Table (2)
Explanation:
Record the journal entry for the due amount paid.
Journal Entry | ||||
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
March 10 | Accounts Payable | 43,900 (1) | ||
      Purchase Discount | 865 (2) | |||
      Cash | 43,035 (3) | |||
(To record paying cash on purchases after discounts and returns) |
Table (3)
Working Notes:
Calculate accounts payable amount.
Purchases = $43,250
Freight paid = 650
Calculate purchase discount.
Accounts payable = $43,250
Discount percentage = 2%
Calculate cash paid.
Accounts payable = $43,250
Purchase discount = $865 (2)
Freight paid = $650
Explanation:
Record the journal entry for purchases of inventory.
Journal Entry | ||||
Date | Account Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
March 13 | Purchases | 15,550 | ||
Accounts Payable | 15,550 | |||
(To record purchases of inventory on account) |
Table (4)
Explanation:
Record the journal entry for purchase returned.
Journal Entry | ||||
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
March 14 | Accounts Payable | 3,750 | ||
Purchases Returns and Allowances | 3,750 | |||
(To record the purchases return) |
Table (5)
Explanation:
Record the journal entry for purchases of inventory.
Journal Entry | ||||
Date | Account Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
March 18 | Purchases | 13,560 | ||
Accounts Payable | 13,560 | |||
(To record purchases of inventory on account) |
Table (6)
Explanation:
Record the journal entry for freight paid.
Date | Account Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
March 18 | Freight-In | 140 | ||
Cash | 140 | |||
(To record the payment of freight charges) |
Table (7)
Explanation:
Cornerstones of Financial Accounting
Corporate Financial Accounting
Accounting Information Systems
Financial & Managerial Accounting
Fundamentals of Financial Management (MindTap Course List)
Essentials of Business Communication (MindTap Course List)
Foundations of Business (MindTap Course List)
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
Principles of Economics (MindTap Course List)
STATISTICS F/BUSINESS+ECONOMICS-TEXT
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Principles of Macroeconomics (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Probability and Statistics for Engineering and the Sciences
Principles of Microeconomics (MindTap Course List)
Financial And Managerial Accounting
College Accounting, Chapters 1-27
Financial Accounting
Management, Loose-Leaf Version
Essentials of Economics (MindTap Course List)
College Accounting (Book Only): A Career Approach
Intermediate Accounting: Reporting And Analysis
Managerial Accounting: The Cornerstone of Business Decision-Making
Accounting Information Systems
MKTG 12:STUDENT ED.-TEXT
Contemporary Marketing
Financial Accounting
Financial & Managerial Accounting
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
College Accounting (Book Only): A Career Approach
Statistics for Business & Economics, Revised (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
Pkg Acc Infor Systems MS VISIO CD
Exploring Economics
Fundamentals of Financial Management (MindTap Course List)
Corporate Financial Accounting
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Survey of Accounting (Accounting I)
Economics (MindTap Course List)
Cornerstones of Cost Management (Cornerstones Series)
Practical Management Science
Microeconomics
Purchasing and Supply Chain Management