Perpetual Inventory System Examples Essay

QUESTION 1. Alpha Corporation is a merchandising company that sells computer parts. Alpha Corporation uses a perpetual inventory system. The following transactions were completed by the company during June 2010: June 7 Purchased 25 Ergonomia monitors from Office Shop on account at a unit cost of $200. June 9 Sold 6 Ergonomia monitors to Computer World Inc. on account for $350 each. June 11 Sold 10 Ergonomia monitors to Best Corporation for $3,200 cash. June 15 Purchased 20 Ergonomia monitors from Office Shop on account at $200 each. June 16Paid the accounts payable for the purchases on June 7. June 19 Sold 10 Ergonomia monitors to Milkyway Company on account. The total sales price was $3,700. June 26 Collected accounts receivable from the sales on June 19. June 30 Paid the accounts payable for the purchases on June 15. Required: a. Prepare the journal entries to record these transactions b. Assume Alpha uses periodic inventory system. Prepare journal entries for the transactions using periodic inventory system. QUESTION 2. Smart Furniture Corporation is a merchandising company that sells chairs. The company uses a perpetual inventory system. It records sales at the gross invoice price and purchases at net cost. Smart Furniture adjusts and closes its accounts monthly. The followings are the transactions in March 2009: Mar 1 Smart Furniture purchased 50 executive chairs from Comfort Company on account. Unit cost of these chairs was $100, terms 3/10,n/30. Mar 3 Sold 40 executive chairs on account to Sweet Home for $200 each, terms 2/10, n/30. Mar 8 Sweet Home returned five executive chairs purchased on March 3. The amount is reduced from the account receivable of Sweet Home. Mar 10 Purchased 50 executive chairs from Comfort Company on account. Unit cost of these chairs was $100, terms 3/10,n/30. Mar 11Returned 10 executive chairs to Comfort Company because they were in the wrong color. Mar 12 Collected accounts receivable from the sales on March 3 within the discount period. Mar 15 Sold 10 executive chairs for on account to Alpha Furnishing, unit sales price was $220, credit terms 2/10, n/30. Mar 19Paid the accounts payable of March 10 purchase within discount period. Mar 25 Paid the accounts payable for the purchases on March 1. Mar 30 Collected accounts receivable from the sales on March 15. Required: a.Prepare the journal entries to record these transactions. b.Prepare the subsidiary inventory ledger executive chairs for the month.