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(Record inventory transactions in the periodic system) Wexton Technologies began the year with inventory of $560. During the year, Wexton purchased inventory costing $1,160 and sold goods for $2,600, with all transactions on account Wexton ended the year with inventory of $640. Journalize all the necessary transactions under the periodic inventory system.
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To journalize: All the transactions under the periodic inventory system.
Answer to Problem 1S
Journalize the all necessary journal entries under the periodic inventory system.
Date | Account title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
1 | Purchases | 1,160 | ||
Accounts Payable | 1,160 | |||
(To record the purchase of inventory) | ||||
2 | Accounts Receivable | 2,600 | ||
Sales revenue | 2,600 | |||
(To record the Sales revenue) | ||||
Year-end entries to record the Cost of goods sold and update the inventory. | ||||
3 | Cost of Goods Sold | 560 | ||
Inventory (beginning balance) | 560 | |||
(To transfer the beginning inventory to Cost of goods sold) | ||||
4 | Cost of Goods Sold | 1,160 | ||
Purchases | 1,160 | |||
(To transfer the purchases to Cost of goods sold) | ||||
5 | Inventory (ending balance) | 640 | ||
Cost of Goods Sold | 640 | |||
(To update the ending inventory based on physical count) |
Table (1)
Explanation of Solution
Purchase of inventory:
- Purchases (stockholders equity) are increased. Thus, purchases are debited with $1,160.
- Accounts Payable (liabilities account) is increased. Thus, it is credited with $1,160.
Sale of inventory:
- Accounts receivable (Asset Account) is increased. Thus, it is debited with $2,600.
- Sales revenue (Stockholders Equity account) is increased. Thus, it is credited with $2,600.
Transferring the beginning inventory to Cost of Goods Sold:
- Cost of goods sold (Stockholders Equity account) is increased. Thus, it is debited with $560.
- Inventory (Asset account) is decreased. Thus, it is credited with $560.
Transferring the purchases to Cost of Goods Sold:
- Cost of goods sold (Stockholders Equity account) is increased. Thus, it is debited with $1,160.
- Purchases (stockholders equity) are decreased. Thus, purchases are credited with $1,160.
Update the ending inventory based on physical count:
- Inventory (asset account) is increased. Thus, it is debited with $640.
- Cost of Goods Sold (Stockholders Equity) is decreased. Thus, it is credited with $640.
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