[Q1] An entity uses a perpetual inventory system.
On June 12, the entity purchased $24,000 inventory on account.
Prepare a journal entry to record this transaction.
[Journal Entry]
| Debit | Credit | |
| Inventory | 24,000 | |
| Accounts payable | 24,000 |
[Notes]
Debit: Increase in inventory
Credit: Increase in accounts payable
Under a perpetual inventory system, inventory purchases during the period are recorded in the “Inventory” account.
Under a perpetual inventory system, inventory account is continuously updated each time inventory is purchased and sold.
[Q2] On June 25, the entity sold $10,000 inventory at the sale price of $16,000 on account.
Prepare journal entries to record this transaction.
[Journal Entry]
| Debit | Credit | |
| Accounts receivable | 16,000 | |
| Sales revenue | 16,000 |
[Notes]
Debit: Increase in accounts receivable
Credit: Increase in sales revenue
| Debit | Credit | |
| Cost of sales | 10,000 | |
| Inventory | 10,000 |
[Notes]
Debit: Increase in cost of sales
Credit: Decrease in inventory
Under a perpetual inventory system, inventory account is updated as inventory is purchased and sold.