Journalize the Following Transactions Assuming a Perpetual Inventory System

question 112

Essay

Journalize the following transactions assuming a perpetual inventory system:
May 5 Purchased merchandise from Archie Co.,$6,000,terms FOB shipping point,2/10,n/30.
Prepaid freight costs of $100 were added to the invoice.
12 Issued a debit memo to Archie Co.for $2,500 of merchandise returned from purchase on May 5.
14 Paid Archie Co.for invoice of May 5,less debit memo of May 12.

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Definitions:

FIFO

"First In, First Out," an inventory valuation method where goods first added to inventory are the first ones to be sold.

LIFO

Last-In, First-Out, an inventory valuation method where the most recently produced items are sold first.

Computed Amounts

Quantitative values determined through calculations or algorithms, often used in financial statements and analyses.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made on a periodic basis, rather than continuously.