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  • Accounting Perpetual & Periodic Comparison

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    This document compares journal entries under perpetual and periodic inventory systems. Under a perpetual system, entries are made to record each purchase and sale when they occur, tracking the inventory account. A periodic system uses a temporary account like purchases to track increases and decreases until inventory is counted. For purchases, a perpetual system credits inventory and debits cash/payables, while periodic systems credit purchases until counting. For sales, perpetual systems debit cost of goods sold and credit inventory and cash/receivables, while periodic systems only credit cash/receivables until counting.

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    Accounting inventory systems under perpetual and periodic with comparison

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    This document compares journal entries under perpetual and periodic inventory systems. Under a perpetual system, entries are made to record each purchase and sale when they occur, tracking the inventory account. A periodic system uses a temporary account like purchases to track increases and decreases until inventory is counted. For purchases, a perpetual system credits inventory and debits cash/payables, while periodic systems credit purchases until counting. For sales, perpetual systems debit cost of goods sold and credit inventory and cash/receivables, while periodic systems only credit cash/receivables until counting.

    Copyright:

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    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    639 views1 page

    Accounting Perpetual & Periodic Comparison

    Uploaded by

    Abbey Li
    This document compares journal entries under perpetual and periodic inventory systems. Under a perpetual system, entries are made to record each purchase and sale when they occur, tracking the inventory account. A periodic system uses a temporary account like purchases to track increases and decreases until inventory is counted. For purchases, a perpetual system credits inventory and debits cash/payables, while periodic systems credit purchases until counting. For sales, perpetual systems debit cost of goods sold and credit inventory and cash/receivables, while periodic systems only credit cash/receivables until counting.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 1

    Comparison of Journal Entries under Perpetual and Periodic Inventory Systems

    SP 1.10

    Douglas College Learning Centre

    COMPARISON OF JOURNAL ENTRIES UNDER PERPETUAL AND PERIODIC INVENTORY SYSTEMS


    Perpetual Inventory System: Record the quantity and cost of each item when they are bought, kept in inventory and sold. Provide detail information so that merchandise availability can be known. Record increase and decrease of merchandise to Merchandise Inventory account. Periodic Inventory System: Use temporary account to add the increase and decrease in merchandise, usually called Purchase account.

    Purchaser
    Transaction Purchase of merchandise Freight cost, paid by purchaser, on goods purchased Return of goods purchased Inventory shortage Perpetual Inventory System Merchandise Inventory Cash/ Accounts Payable Merchandise Inventory Cash Cash/ Account Payable Merchandise Inventory Loss due to Inventory Shortage Merchandise Inventory Periodic Inventory System Purchases Cash / Accounts payable Freight In Cash Cash/ Account Payable Purchase Return and Allowance No entry

    Seller
    Transaction Sale of merchandise Perpetual Inventory System Cash/ Accounts Receivable Sales Cost of Goods Sold merchandise Inventory Delivery Expense/ Freight Out Cash Periodic Inventory System Cash/ Accounts Receivable Sales No entry Delivery Expense/ Freight Out Cash

    Freight cost, paid by seller, on goods sold Return on merchandise sold (assuming merchandise not damaged)

    Sales return and Allowances Cash / Account receivable Merchandise Inventory Cost of Goods Sold

    Sales return and Allowances cash / Account receivable No entry

    Taken from Weygandt, Kieso and Trenholm. (1999). Accounting Principle (p. 197). Toronto: John Wiley & Sons Canada, Ltd.
    F:\Handouts for PDF\Special Purpose\SP1 Accounting\SP1.10 Accounting. Perpetual & Periodic Comparison.doc M. Loekman/2003

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