Question

A company uses a perpetual inventory system. The company began its fiscal year with inventory of $998,000. Purchases of merchandise on account during the year totaled $3,124,089. Merchandise costing $3,456,980 was sold on account for $6,909,879. Prepare the journal entries to record these transactions.

Answer 1

Date Account Titles and Explanation Debit Credit

Inventory $3,124,089

Account payable $3,124,089

(To record purchase of merchandise inventory)

Account receivables $6,909,879

Sales revenues $6,909,879

(To record sales on account)

Cost of goods sold $3,456,980

Inventory $3,456,980

(To record the cost of sales)