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The following information is available for the Johnson Corporation for 2016:

Beginning inventory $ 30,000
Inventory purchases (on account) 160,000
Freight charges on purchases (paid in cash) 15,000
Inventory returned to suppliers (for credit) 17,000
Ending inventory 35,000
Sales (on account) 255,000
Cost of inventory sold 153,000

Required:
Applying both a perpetual and a periodic inventory system, prepare the journal entries that summarize the transactions that created these balances. Include all end-of-period adjusting entries indicated.

User Orhankutlu
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1 Answer

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Answer:

The Journal entry of perpetual and a periodic inventory system is shown below:-

Step-by-step explanation:

The Journal entry is shown below:-

For Perpetual system

1. Inventory Dr, $160,000

To accounts payable $160,000

(Being purchase of inventory is recorded)

2. Inventory Dr, $15,000

To cash $15,000

(Being cash is recorded)

3. Accounts payable Dr, $17,000

To Inventory $17,000

(Being returned of inventory is recorded)

4. Accounts receivable Dr, $255,000

To Sales revenue $255,000

(Being sales on account is recorded)

5. Cost of Goods sold Dr, $153,000

To Inventory $153,000

(Being cost of goods sold is recorded)

6. No Journal Entry

For Periodic inventory system

1. Purchase Dr, $160,000

To accounts payable $160,000

(Being inventory purchased is recorded)

2. Freight in Dr, $15,000

To cash $15,000

(Being freight charges for cash is recorded)

3. Accounts payable Dr, $17,000

To Purchase return $17,000

(Being returned of inventory is recorded)

4. Accounts receivable Dr, $255,000

To Sales revenue $255,000

(Being sales is recorded)

5. No Journal Entry

6. Cost of goods sold Dr, $153,000

Ending inventory Dr, $35,000

Purchase return Dr, $17,000

To Beginning inventory $30,000

To Purchases $160,000

To Freight in $15,000

(Being end-of-period is recorded)

User David Holbrook
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