Question

Matlock Company’s beginning inventory consists of 50 units that cost $34 each. During June, (1) the company purchased 150 units at $34 each on account, (2) returned 6 units, and (3) sold 125 units at $50 each to a customer. Matlock uses FIFO to account for its inventory. All purchase and sale credit terms are n/30.

1: Journalize the month’s transactions assuming the use of a perpetual inventory system.

2: Journalize the month’s transactions assuming the use of a periodic inventory system. Skip the month-end closing entry to record COGS and update inventory.

Answer 1

Journal entry : Perpetual inventory system

No	General Journal	Debit	Credit
1	Merchandise inventory (150*34)	5100
	Account payable		5100
2	Account payable (6*34)	204
	Merchandise inventory		204
3	Account receivable (125*50)	6250
	Sales return		6250
	Cost of goods sold (125*34)	4250
	Merchandise inventory		4250

Journal entry : Periodic inventory system

No	General Journal	Debit	Credit
1	Purchase (150*34)	5100
	Account payable		5100
2	Account payable (6*34)	204
	Purchase return and allowance		204
3	Account receivable (125*50)	6250
	Sales return		6250