ACIS Lesson 4

Perpetual System

Updates accounting records for each purchase and sale of inventory

Periodic Systems

Updates accounting records for purchases/sales of inventory only at end of period

2/10, n/30

2: discount percent, 10: number of days the discount is available, n: otherwise, all due in 30 days, 30: credit period

Journal with Discount

Accounts Payable (Dr)

Merch Inventory (Cr)

Paid within Discount Period (Cr)

Purchase Allowance

Price reduction to buyer of defective or unacceptable merchandise

Purchase Allowance Journal Entry

Accounts Payable (Dr)

Merch Inventory (Cr)

Purchase Return

Merchandise returned by purchaser to supplier

Purchase Return Journal Entry

Merch Inventory (Dr)

Accounts Payable (Cr)

then:

Accounts Payable (Dr)

Merch Inventory (Cr)

then:

Acc. Payable (Dr)

Merch Inventory (Cr)

Cash (Cr)

Sales Returns

Merchandise that customers return to seller after a sale

Sales Allowances

Reductions in selling price of merchandise sold to customers

Sales Returns Journal Entry

Sales Returns and Allowances (Dr)

Cash (Cr)

then, returned goods:

Merch Inventory (Dr)

COGS (Cr)

Purchase Transactions Journal Entry

Inventory (Dr)

Acc. Payable (Cr)

then, if paid within discount period:

Acc. Payable (Dr)

Cash (Cr)

Inventory (Cr)

Sales Transactions Journal Entry

Acc. Receivable (Dr)

Sales Rev. (Cr)

second entry anytime you make a sale:

COGS (Dr)

Inventory (Cr)