Perpetual inventory system: basic entries Renato Company uses a perpetual invent

Question

Perpetual inventory system: basic entries Renato Company uses a perpetual inventory system. A partial chart of accounts is shown below, followed by a series of merchandising transactions. Indicate the accounts that should be debited and credited in recording each transaction. lgnore sales taxes.) 50 Sales Cash 2 Accounts Receivable 60 Cost of Goods Sold 5 Inventory 30 Accounts Payable x All other expense accounts Account(s) Account(s) DebitedCre 1,60 Credated 50,5 Transactions Example: Sold merchandise for cash Purchased merchandise on account A B Sold merchandise on account c Paid the supplier for the merchandise in transaction a D Collected cash from the customer in transaction b E The physical inventory at year-end disclosed a normal amount of inventory shrinkage

Explanation / Answer

Transaction Account Debited Account Credited A Purchased merchandise on account Inventory - 5 Accounts Payable -30 B Sold Mercandise on account Accounts Receivable -2 Sales - 50 Cost of Goods Sold -60 Inventory - 5 C Paid the Supplier for merchandise transaction A Accounts Payable -30 Cash - 1 D Collected cash from the customer in transaction B Cash - 1 Accounts Receivable -2 E The Physical Inventory at the year end disclosed a normal amount of inventory shrinkage Cost of Goods Sold -60 Inventory - 5

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