a. Microprints Inc. had the following transactions for the month of August 20X1

Aug. 2 Sold merchandise on account for $25,000; terms 2/10, n/30, FOB shipping point. The cost of goods sold is $18,000.

18 Received payment for the sale of August 2.

20 A total of $1,000 of the merchandise sold on August 2 was returned, and a full refund was made because it was the wrong merchandise. The cost of goods sold is $720.

28 An allowance of $1,300 was granted on the sale from August 2 because some merchandise was damaged; $1,300 cash was returned to the customer.

b. Ashley Company engaged in the following transactions in August 20x1:

Aug. 4 Purchased merchandise on account at a cost of $ 14,000; terms 2/10, n/30, FOB shipping Point.

6 Paid freight of $200 on the purchase of August 4.

10 Sold goods for $10,000; terms 2/10, n/30. The cost of goods sold is $9,000.

12 Returned to the vendor, $2,400 worth of the merchandise purchased on August 4.

14 Paid the amount due on the purchase of August 4.

Requirement:

1) Using the template, prepare journal entries for both Microprints and Ashley transactions assuming:

i) Periodic system.

ii) Perpetual system.

2) Your client has asked for advice on whether to use the perpetual or periodic inventory system. Recommend an inventory system giving reasons why it is best for your client.

Module 4: Critical Thinking Template Option #2
[COMPANY NAME]
Journal Entries
Date		Account Name	Periodic System			Perpetual System
August			Debit	Credit		Debit	Credit
2	a)
	b)
18
20	a)
	b)
28
					Unadjusted Trial Balance
		Account Name				Credit
		Cash
		Accounts receivable
		Equipment
		Supplies
		Accounts payable				#REF!
		Capital stock				#REF!
		Revenue				#REF!
		Rent expense
		Total				#REF!

Module 4: Critical Thinking Template Option #2
[COMPANY NAME]
Journal Entries
Date		Account Name	Periodic System			Perpetual System
August			Debit	Credit		Debit	Credit
4
6
10	a)
	b)
12
14