Question

1. perpetual inventory - chapter 5 kb lb corporation purchases fans for resale. journalize the following transactions under a perpetual inventory system. february 2 purchased 500 fans from supplier at $10 each on account, with terms of 2/10, n/30. february 7 returned 50 fans to the distributor. february 11 paid for the merchandise purchased on february 2nd. february 16 sold 55 fans to customer on account for $30 each, with terms of 1/10, n/30. (cost of fans: $10 each) february 19 customers returned 5 fans from the february 16th purchase. february 22 customer paid for fans purchased on february 16th. february 25 purchased $1,000 worth of inventory from supplier on account, with 2/10, n/30 terms. freight costs were paid directly to the trucker for $200 in cash.

Explanation:

Step1: Record February 2 purchase

Debit Inventory ($500\times10 = 5000$) and Credit Accounts Payable $5000$. Terms 2/10, n/30 mean 2% discount if paid within 10 days, net due in 30 days.

Date	Account Titles and Explanation	Debit	Credit
	Accounts Payable		5000

Step2: Record February 7 return

Debit Accounts Payable ($50\times10 = 500$) and Credit Inventory $500$.

Date	Account Titles and Explanation	Debit	Credit
	Inventory		500

Step3: Record February 11 payment

The amount due is $5000 - 500=4500$. Since paid within the discount - period (10 days), the discount is $4500\times0.02 = 90$. Debit Accounts Payable $4500$, Credit Inventory (discount) $90$ and Credit Cash ($4500 - 90=4410$).

Date	Account Titles and Explanation	Debit	Credit
	Inventory		90
	Cash		4410

Step4: Record February 16 sale

Debit Accounts Receivable ($55\times30 = 1650$) and Credit Sales Revenue $1650$. Also, debit Cost of Goods Sold ($55\times10 = 550$) and credit Inventory $550$.

Date	Account Titles and Explanation	Debit	Credit
	Sales Revenue		1650
	Cost of Goods Sold	550
	Inventory		550

Step5: Record February 19 customer return

Debit Sales Returns and Allowances ($5\times30 = 150$) and Credit Accounts Receivable $150$. Also, debit Inventory ($5\times10 = 50$) and credit Cost of Goods Sold $50$.

Date	Account Titles and Explanation	Debit	Credit
	Accounts Receivable		150
	Inventory	50
	Cost of Goods Sold		50

Step6: Record February 22 customer payment

The amount due is $1650 - 150 = 1500$. Since paid within the discount - period, the discount is $1500\times0.01=15$. Debit Cash ($1500 - 15 = 1485$), debit Sales Discounts $15$ and credit Accounts Receivable $1500$.

Date	Account Titles and Explanation	Debit	Credit
	Sales Discounts	15
	Accounts Receivable		1500

Step7: Record February 25 purchase

Debit Inventory $1000$ and Credit Accounts Payable $1000$. Also, debit Inventory $200$ and credit Cash $200$ for freight - in.

Date	Account Titles and Explanation	Debit	Credit
	Accounts Payable		1000
	Inventory	200
	Cash		200

Answer:

See the journal - entries above for each transaction recorded under the perpetual inventory system.