Data for Travel Warehouse Ltd. are presented in P5-2B.
In P5-2B.
July 2 Purchased 75 suitcases on account for $60 each from Trunk Manufacturers Ltd., terms 2/10, n/30.
3 Received a $240 credit from Trunk Manufacturers after returning four suitcases because they were damaged.
6 Sold 55 suitcases on account to Satchel World Inc. for $90 each, with an average cost of $50, terms 2/15, n/45.
7 Issued a $270 credit for three suitcases returned by Satchel World because they were the wrong model. The suitcases were returned to inventory.
9 Sold three suitcases-this time the right model number-on account to Satchel World Inc. for $100 each, with an average cost of $60, terms 2/15, n/45.
11 Paid Trunk Manufacturers the balance owing.
13 Sold 25 suitcases on account to The Going Concern Limited for $100 each, with an average cost of $60, terms 2/15, n/45.
16 Purchased 70 suitcases on account for $4,340 from Holiday Manufacturers, terms n/45.
17 Issued a $500 credit for five suitcases returned by The Going Concern because they were damaged. These suitcases were not restored to inventory.
20 Received payment in full from Satchel World for all transactions.
27 Received payment in full from The Going Concern.
Instructions
(a) Record the July transactions on Travel Warehouse's books, assuming it uses a periodic inventory system instead of a perpetual inventory system. (Record transactions to the nearest dollar.)
(b) Identify the advantages and disadvantages of Travel Warehouse using a periodic inventory system instead of a perpetual inventory system.