Page 43 - Demo

CH(2): Journal entries %u2013Periodic Inventory system40Somebusinessesfindit either unnecessary or uneconomical to invest in a computerized perpetual inventory system. Many small merchandising businesses, in particular, find that a perpetual inventory system costs more than it is worth. Managers of these businesses can controltheir merchandise and mange day-to-day operations using a periodic inventory system.Preparing journal entries under periodic inventory system.1-Recording Purchasesof Merchandise(Goods):A-1) Purchases goods for cash:Under the periodic inventory system purchased goods are recordedunder the name purchases not inventory.Illustration 2-1:On Jan,22020, SalmanCompany purchased merchandise from Raja Est,BD8,000 for cash. It was recorded in the general journal:GENERAL JOURNALDateAccount Title and ExplanationPRDebitCreditJan,2Purchases8,000Cash8,000Purchasegoods for cashPurchases goods (merchandise)for cashDebitCreditPurchasesCash