Professional Documents
Culture Documents
Balance Sheet
Inventory
Asset
Income Statement
Sales revenue
Cost of goods sold
Expense
Cash
Purchase
inventor
y
Collect
cash
from
customer
s
Accounts
receivable
Sell
inventor
y
Inventory
PERIODIC
Goods counted
periodically to
determine quantity
Used by small
businesses
Less popular now
because of
computerized
inventory systems
PERPETUAL
Record of quantity of
goods is constantly
updated
Better control of
inventory
Popular now due to
bar codes and
computer scanning
Shipping costs
Return of purchased items
Discounts for early payment
GENERAL JOURNAL
DATE
DESCRIPTION
REF
Inventory
Accounts payable
DEBIT
CREDIT
$$$$
$$$$
2/10 ,
n/30
2% discount if
paid within 10
days
Other terms:
n/30
No discount, full
amount due in 30
days
eom
10
GENERAL JOURNAL
DATE
DESCRIPTION
REF
Accounts payable
Cash
Inventory
Paid within discount period
DEBIT
CREDIT
$$$$
$$$$
$$$
Purchase return
Merchandise returned by the purchaser to the
supplier
Purchase allowance
Seller reduces amount owed
Incentive for purchaser to keep goods
12
GENERAL JOURNAL
DATE
DESCRIPTION
REF
Accounts payable
Inventory
Returned damaged goods
DEBIT
CREDIT
$$$$
$$$$
Reverse of purchase
entry
Decreases both accounts
payable and inventory
Copyright (c) 2009. Prentice Hall. All rights reserved.
14
Sales revenue
Amount earned from selling inventory
Revenue account
15
GENERAL JOURNAL
DATE
DESCRIPTION
REF
DEBIT
$$$$$
$$$$$
CREDIT
$$$$$
$$$$$
16
Sales discounts
Freight-out
Delivery expense
If terms are FOB shipping point
17
GENERAL JOURNAL
DATE
DESCRIPTION
REF
DEBIT
CREDIT
$$$$
$$$$
$$$$
$$$$
Customer returned
merchandise
18
GENERAL JOURNAL
DATE
DESCRIPTION
REF
Cash
Sales discounts
Accounts receivable
DEBIT
CREDIT
$$$$$
$$$$
$$$$$
19
Sales
minus
Sales Discounts
equals
Net Sales
Copyright (c) 2009 Prentice Hall. All rights reserved.
20
Net Sales
minu
s
Gross Profit
Copyright (c) 2009 Prentice Hall. All rights
reserved.
21