Perpetual Inventory System: Transactions and Closing Entries
Danny's Wholesale Company

question 105

Essay

Perpetual inventory system: transactions and closing entries
Danny's Wholesale Company uses a perpetual inventory system. A partial chart of accounts is shown below, followed by a series of merchandising transactions. Indicate the accounts that should be debited and credited in recording each transaction. (Ignore sales taxes.) $$\begin{array} { | l | l | l | l | } \hline 1 & \text { Cash } & 50 & \text { Sales } \\\hline 2 & \text { Accounts Receivable } & 60 & \text { Cost of Goods Sold } \\\hline 5 & \text { Inventory } & 99 & \text { Income Summary } \\\hline 30 & \text { Accounts Payable } & & \\\hline 40 & \text { Retained Earnings } & & \\\hline\end{array}$$ $\begin{array}{|l|l|l|l}\hline & { \text { Transartions } } & \begin{array} { c } \text { Accounts(s) } \\\text { Debited }\end{array} & \begin{array} { c } \text { Account(g) } \\\text { Credited }\end{array} \\\hline & \text { Example: Sold goods for cash } & 1,60 & 50,5 \\\hline \text { A } & \text { Purchased goods on account } & & \\\hline \text { B } & \text { Sold goods on account } & & \\\hline \text { C } & \text { Paid the supplier of the goods in transaction A } & & \\\hline \text { D } & \text { Collected cash from the customer in transaction B } & & \\\hline \text { E } & \begin{array}{l}\text { The physical inventory taken at year-end } \\\text { disclosed a normal amount of inventory shrinkage }\end{array} & & \\\hline \text { F } & \text { Made an entry to close the revenue account } & & \\\hline \text { G } & \begin{array}{l}\text { Made an entry at year-end to close the Cost of } \\\text { Goods Sold account }\end{array} & & \\\hline \text { H } & \begin{array}{l}\text { Closed the Income Summary account at the end of } \\\text { an unprofitable year }\end{array} & &\\\hline\end{array}$

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Definitions:

Sartre

pertains to Jean-Paul Sartre, a French existentialist philosopher, playwright, novelist, and political activist known for his exploration of freedom, existentialism, and phenomenology.

Existentialists

Philosophers who focus on individual freedom, choice, and subjective experience, emphasizing the creation of meaning in an inherently meaningless world.

Bad Faith

A term in existentialist philosophy where one denies their true self or nature, often out of self-deception or conforming to social norms.

Self-Determination Theory

A psychological theory of motivation that emphasizes the role of intrinsic motivations in personal growth and behavioral self-regulation.