Periodic Inventory system Flashcards
When is calculation of Cost of Goods Sold performed?
At the end of the period (when physical inventory count is done)
Periodic Income statement order
Sales, COGS: Inventory Jan 1, Purchases, cogs available for sale, less Inventory Dec 31, cogs, gross profit or loss
Merchandise inventory (closing entry)
Dr. Income summary
Cr. Merchandise Inventory
Dr. Merchandise Inventory
Cr. Income summary
Sales (closing entry)
Dr. Merchandise inventory
Dr. Sales
Cr. Income summary
Expenses (closing entry)
Dr. Income summary
Cr. Merchandise inventory
Cr. Expenses
Capital
Dr. income summary
Cr. capital
Drawings
Dr. Capital
Cr. Drawings
Purchase on account
Dr. Purchases
Cr. Accounts payable
Credit invoice
Dr. Accounts payable
Cr. purchase returns and allowance
Purchase discount
Dr. Accounts Payable
Cr. Bank
Cr. Purchase discounts
Transportation charges
Dr. Freight-in
Cr. Bank
Sale on account
Dr. Accounts receivable
Cr. sale
Sale return defective goods
Dr. Sales Returns and Allowances
Cr. Accounts receivable
Sale discount
Dr. Bank
Dr. Sales Discount
Cr. Accounts receivable
How do companies decide which inventory system to use?
Periodic inventory accounting systems are better suited to small businesses that have easy-to-manage inventories or those with low sales volumes. Businesses with larger inventories, high sales volumes, and multiple retail outlets need perpetual inventory systems
