A Company Uses a Periodic System to Record Inventory Transactions

question 35

Essay

A company uses a periodic system to record inventory transactions. The company purchases inventory on account on February 9, 2012, for $50,000 and then sells this inventory on account on March 7, 2012, for $70,000. Record the transactions for the purchase and sale of the inventory.

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Definitions:

Lean Manufacturing

A production philosophy that focuses on minimizing waste within manufacturing systems while simultaneously maximizing productivity.

Maximum Amount

The highest possible quantity or degree of something that can be achieved or allowed.

Bullwhip Effect

A phenomenon in supply chain management where small fluctuations in demand at the retail level cause increasingly larger fluctuations in demand at the wholesale, distributor, and manufacturer levels.

Manufacturing

The process of producing goods through the combination of labor, machinery, tools, chemical or biological processing, or formulation.