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Perpetual and Periodic SystemsRecording Inventory-Related Entries using the Gross Method

The following transactions are from Sharper Vision Corporation.

1. Purchased inventory on December 10, 2020, with a list price of $3,750, a trade discount of 20%, and with terms 2/10, n/30.
2. Returned $500 of inventory to the supplier on December 15, 2020.
3. Paid $2,000 cash on account on December 19, 2020.
4. Paid the remaining balance on January 5, 2021.

a. Prepare journal entries for the transactions 1 through 4, assuming that the company uses the perpetual inventory system and the gross method for recording purchase discounts.

b. Prepare journal entries for the transactions 1 through 4, assuming that the company uses the periodic inventory system and the gross method for recording purchase discounts.

Perpetual inventory system Periodic inventory system a. Prepare journal entries for the transactions 1 through 4, assuming that the company uses Account Name Dr. Cr. 3,000 0 0 0 3,000 > 500 o 0 500 Date Dec. 10, 2020 Inventory Accounts Payable Dec. 15, 2020 Accounts Payable Inventory Dec. 19, 2020 Accounts Payable Inventory Cash Jan. 5, 2021 Accounts Payable Cash 2,900 X 0 0 400 x O 2,500 500 x 0 0 500 x Perpetual inventory system Periodic inventory system b. Prepare journal entries for the transactions 1 through 4, assuming that the company uses Date Account Name Dr. Cr. 3,000 0 0 3,000 500 0 0 500 Dec. 10, 2020 Purchases Accounts Payable Dec. 15, 2020 Accounts Payable Purchase Returns and Allowances Dec. 19, 2020 Accounts Payable Purchase Discounts Cash Jan. 5, 2021 Accounts Payable Cash 2,900 x 0 O 400 x 0 2,500 x - 500 X 0 > 0 500 X

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