. Journalize the following transactions using the perpetual inventory method.
Aug. 6 Purchased $830 of inventory on account from
Johnston with terms of 2/10, n/30.
Aug. 8 Purchased $2,611 of inventory for cash from
Pillner Company.
Aug.15 Paid for August 6 purchase from Johnston.
Aug. 17 Purchased $1,743 of merchandise on account
from Luis Company with Terms of 3/15, n/45.
To journalize the transactions using the perpetual inventory method, we need to record the transactions in the appropriate accounts. Here's how you can journalize each transaction:
1. Aug. 6: Purchased $830 of inventory on account from Johnston with terms of 2/10, n/30.
The accounts involved in this transaction are:
- Inventory (Asset account)
- Accounts Payable (Liability account)
The journal entry would be:
Debit: Inventory $830
Credit: Accounts Payable $830
2. Aug. 8: Purchased $2,611 of inventory for cash from Pillner Company.
The accounts involved in this transaction are:
- Inventory (Asset account)
- Cash (Asset account)
The journal entry would be:
Debit: Inventory $2,611
Credit: Cash $2,611
3. Aug.15: Paid for August 6 purchase from Johnston.
The accounts involved in this transaction are:
- Accounts Payable (Liability account)
- Cash (Asset account)
The journal entry would be:
Debit: Accounts Payable $830
Credit: Cash $830
4. Aug. 17: Purchased $1,743 of merchandise on account from Luis Company with Terms of 3/15, n/45.
The accounts involved in this transaction are:
- Inventory (Asset account)
- Accounts Payable (Liability account)
The journal entry would be:
Debit: Inventory $1,743
Credit: Accounts Payable $1,743
Remember, the perpetual inventory method updates the inventory account continuously for every purchase or sale made. It provides a real-time record of inventory levels and cost of goods sold.