5A. Periodic Inventory System Flashcards
When is the revenue from the sale of merch recorded in both systems?
(Perpetual AND Periodic)
WHEN the performance obligation is complete
(this is usually when merch is delievered to the buyer)
In periodic, is the cogs recorded on date of sale?
NO!!! this is only determined at the end of each accounting period when inventory count is taken
How do you record purchases OF INVENTORY in periodic?
NOT A PERMANENT INVENTORY ACCT!!
=temporary Purchases account
EXPENSE ACCT!! SO DR NORMAL BALANCE
How are purchase returns and allowances,
purchase discounts,
and frieght costs recorded in periodic?
purch disc + purch ret and all= contra expense
freight in: TEMPORARY EXPENSE ACCOUNTS!!!!
Do you ever use the inventory account when you acquire inventory in periodic?
NEVER@@@
EX: if company A bought inventory from company B worth 200, what is the JE for A?
Purchases 200
A/P 200
EX: if FOB shipping point, how will buyer record shipping cost of 100 in their books?
Freight In 100
Cash 100
What is Freight In in periodic?
Temporary expense acct!!! freight is part of the cost of goods purchased!!!
this is bc it was incurred to bring the goods to the buyer
How would you record return of $300 to a seller in buyer books?
Accounts Payable 300
Purchase Returns and Allowances 300
PURCHASE R&A; normal balance is credit
What is purchase returns and allowances in periodic
CONTRA EXPENSE ACCOUNT to PURCHASES!!! cr balance
its value subtracted from the purchases account
How do you record purchase discounts?
A/P Total amount of goods
Cash Total amt-discounts
Purchase Discounts discounts
Purchase Discounts acount
temporary acct, normal credit balance
CONTRA EXPENSE acct to PURCHASES
What two accounts are contra expense to purchases acct
purchase discounts
purchase returns and allowances
Purchase of merchandise- purchase returns and allownaces- purchase discounts =?
net purchases
Net purchases + Freight (when FOB shipping point) = ?
cost of goods purchased
cost of goods purchased formula
purchases- purchases discounts- purchases returns and allowances=
net purchases
_____________________________________________
net purchases + fob shipping point (Freight in) =
cost of goods purchased
how is sales of merchandsie recorded in periodic?
ONLY ONE JE (CUZ NO COGS AND INVENTORY ACCT)
A/R / CASH
SALES
REFUND LIABLILITY
How are sales returns and allowances recorded in periodic
ONE JE!!!! because other JE increases inventory acct and thas not adjusted in periodic
Refund Liability
A/R
how is COGS calculated
calculated at the end!!!
1) calculate cogp
2) cogp+ beginning inventory= cog available for sale
3) find ending inventory from inventory count
4) cog available for sale- ending inventory= cogs
COGP FORMULA
Purchases- purchase returns and allowances- purchase discounts= net purchases
net purchases + freight in = cogp
COG available for sale formula
begining inventory + cogp= cog available for salec
cogs
cog available for sale- ending inventory= cogs
How are adjusting entries made at period end?
DR Inventory (Ending)
DR COGS
DR Purchases returns and allowances
DR Purchase Discounts
CR Inventory (Beginning)
CR Purchases
CR Freight IN
REFER TO 5.6 TO SEE HOW ADJUSTING ENTRY IS MADE IN PERIODIC INVENTORY SYSTEM
