Prepare journal entries to record each of the merchandising transactions assuming that the company records purchases using the gross method and a periodic inventory system. November 5 Purchased 750 units of product at a cost of $12 per unit. Terms of the sale are 4/10, n/60; the invoice is dated November 5. November 7 Returned 50 defective units from the November 5 purchase and received full credit. November 15 Paid the amount due from the November 5 purchase, minus the return on November 7.

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…