Part I Match the inventory system with the statement by entering the appropriate

Question

Part I Match the inventory system with the statement by entering the appropriate letters to the left (10 marks) A. Perpetual inventory system. B. Periodic inventory system. C. Neither of the above is correct D. Both A and B are correct. . The inventory system that provides more control features. 2. Record only one set of journal entries whenever sales arise 3. The Inventory account is debited when goods are purchased. 4. A physical inventory count is never taken 5. Record two sets of journal entries whenever sales arise. Part II Assume cost of inventory is 80% of sales. Journalize the transactions (a) to (d) below under the perpetual and periodic inventory systems separately in the tabular form provided (20 marks) Perpetual Invento Debit Periodic Invento Debit Account Credit Account Credit

Explanation / Answer

ans 1 A 1 B 2 A 3 C 4 A 5 ans 2 Perpetual system Account Dr Cr a Inventory $1,000 Cash $1,000 b Cash $600 Sales $600 Cost of good sold (600*80%) $480 Inventory $480 c Sales return $100 Cash $100 Cost of good sold (100*80%) $80 Inventory $80 d Cash Inventory Periodic Inventory a Purchases $1,000 Cash $1,000 b Cash $600 Sales $600 c Sales return $100 Cash $100 d Cash $50 Purcahse Return $50

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