Question

Journalize the Merchandise Transactions (Perpetual Inventory System):

On account, the company sold merchandise for $14,600 with terms 2/10, net 30. The cost of goods sold amounted to $9,490. If an amount box does not require an entry, leave it blank.

Journal Entry:
Debit: _________________ (Account for Accounts Receivable or Customer)
Debit: _________________ (Account for Cost of Goods Sold)
Credit: _________________ (Account for Sales Revenue)

Answer 1

Journal entries for the sale of merchandise on account in a perpetual inventory system include debiting Accounts Receivable for the sales amount and crediting Sales Revenue, while also debiting Cost of Goods Sold and crediting Inventory for the cost associated with the sold goods.

Step-by-step explanation:

To journalize the merchandise transactions in a perpetual inventory system, we need to record both the sales and the cost of goods sold (COGS). The company sold merchandise on account, meaning the transaction will increase accounts receivable and recognize sales revenue. Simultaneously, the transaction will recognize the COGS and reduce inventory.

The proper journal entries for these transactions are as follows:

• Debit: Accounts Receivable $14,600 (for the amount sold on account)
• Credit: Sales Revenue $14,600 (for the sales made)
• Debit: Cost of Goods Sold $9,490 (for the cost associated with the goods sold)
• Credit: Inventory $9,490 (to record the reduction of inventory due to the sale)

This dual entry ensures that the perpetual inventory system accurately reflects the cost of inventory sold and remaining.