Question

Marin Company uses a perpetual inventory system. Its beginning inventory consists of 65 units that cost $44 each. During June, (1) the company purchased 195 units at $44 each, (2) returned 8 units for credit, and (3) sold 163 units at $65 each.

Answer 1

Dr. Cr.

(1)

The company purchased

195 units at $44 each

Inventory (195 x 44) 8,580

Account Payable / Cash 8,580

(2)

Returned 8 units

for credit

Account Payable / Cash 352

Inventory (8 x 44) 352

(3)

Sold 163 units

at $65 each.

Account receivable / Cash 10,595

Sales ( 163 x 65 ) 10,595

Cost of Goods sold 7,172

Inventory 7,172

Inventory Account: Dr. Cr. Balance

Opening Balance ( 65 x $44 ) $2,860

(1) Purchase $8,580 $11,440

(2) Purchase Return $352 $11,088

(3) Sale $7,172 $3,916

Inventory Closing Value is $3,916.