Accounting for Merchandise Inventory

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Subject –Accounting

Accounting for Merchandise Inventory

 

Purchase related journal ( Gross Basis)

Transactions	Periodic Inventory System	Perpetual Inventory System
1. Purchase for cash or on credit	Purchase ………………     …    Debit Cash /Accounts Payable       …  Credit	Merchandise Inventory……      Debit Cash /Accounts Payable  …      Credit
2. For freight / Carriage in    ( FOB Shipping Point)	Carriage in ……………     …    Debit Cash    …………………    …    Credit	Merchandise Inventory……      Debit Cash ……………………                    Credit
3. Purchase Return & Allowance	Cash /Accounts Payable……     Debit Purchase Return & Allowance   Credit	Cash /Accounts Payable……     Debit Merchandise Inventory   …       Credit
4. Payment after discount period	Accounts Payable                      Debit Cash                                                 Credit	Accounts Payable                       Debit Cash                                           Credit
5. Payment within discount period	Accounts Payable                       Debit Cash                                                  Credit Purchase Discount                      Credit	Accounts Payable                       Debit Cash                                           Credit Merchandise Inventory              Credit

Sales related journal ( Gross Basis)

Transactions	Periodic Inventory System	Perpetual Inventory System
1.Sales for Cash or on Credit	Cash/Accounts Receivable       Debit       Sales Revenue                        Credit	(a) Cash/Accounts Receivable   Debit       Sales Revenue                      Credit
		(b) Cost of goods sold                 Debit       Merchandise Inventory        Credit
2. For Freight out / Carriage out  ( FOB Destination)	Carriage out ……………     …   Debit Cash    …………………    …    Credit	Carriage out ……………     …  Debit Cash    …………………    …   Credit
3. Sales Return & Allowance	Sales Return & Allowance          Debit Cash/Accounts Receivable         Credit	(a) Sales Return & Allowance   Debit       Cash/Accounts Receivable  Credit
		(b) Merchandise Inventory        Debit       Cost of goods sold               Credit
4.Collections from A/R after discount period	Cash                                            Debit Accounts receivable                   Credit	Cash                                            Debit Accounts receivable                   Credit
5. Collections from A/R within discount period	Cash                                            Debit Sales Discount                            Debit Accounts receivable                   Credit	Cash                                            Debit Sales Discount                            Debit Accounts receivable                   Credit

    N.B :       Gross discount Basis :   Discount Calculate at the time of  Payment or Collection

                    Net discount Basis    :   Discount Calculate at the time of Purchase or sales

      

                                                                                                    Mohammad Ataur Rahman

                                                                                                    B.com(Hon’s), B.Ed(first class). 

                                                                                                 M.B.S(Accounting) First Class. 

                                                                               Mobile-01911871665

 

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