What are the journal entries a merchandising organization would use to record the purchase and subsequent sale of merchandise?
The journal entries used to record the purchase and subsequent sale of merchandise would be Merchandising, Recording Purchases of Merchandise, Recording Sales of Merchandise, Income Statement Presentation Operations, and Evaluating
How would these transactions differ with a periodic versus a perpetual inventory system?
A perpetual inventory system determines the cost of goods sold each time a sale occurs. It also requires additional clerical work and additional cost to maintain inventory records, a computerized system can minimize this cost. These records continuously perpetually show the inventory that should be on hand for every item.
In a periodic inventory system, companies do not keep detailed inventory records of the goods on hand throughout the period. They determine the costof goods sold only at the end of the accounting period—that is, periodically. At that point, the company takes a physical inventory count to determine thecost of goods on hand
Merchandising would use many types of journal entries because a company that buys, makes, and sells merchandise would require journalizing in accounts payable, inventory, sales revenue, cost of goods sold, accounts receivable, sales discounts, and sales returns and allowances, just to name a few.
In a periodic inventory system a company would not keep detailed inventory records and would only determine what goods were sold in an accumulation at the end of an accounting period. Perpetual inventory systems keep detailed inventory records of each item sold as it is sold. This allows a company to show up to the minute inventory data. Perpetual inventory systems offer better control of inventories and enables a just in time ordering system where a customer can be told if a product is on hand or when it will be on hand at the moment of sales. The overall difference between the two systems is when the data of the sale is recorded, Perpetual accounting systems record it at the point of sales (POS), while periodic accounting systems wait and add up sales at the end of an accounting period.