Al-Faisal Company is a well-known perfume trader in Oman. The company was established in 1976 and is trading local and international perfumes through five of its stores. Recently it has added watches, cosmetics and accessories in its inventory along with perfumes. The company has engaged in the following transactions in April 2020.

April 2	Purchased watches on account from Salim Company OMR 9,000, terms 2/10, n/60.
4	Sold watches on account to customers OMR 6,000, terms 2/0, n/30. The cost of the watches sold was OMR 3,800.
5	Paid OMR 200 freight on April 4 sale.
6	Received credit from Salim Company for watches returned OMR 500.
11	Paid Salim Company in full, less return and discount.
13	Received collections in full, less discounts, from customers billed on April 4.
14	Purchased watches for cash OMR 5,000.
16	Received refund from supplier for returned watches on cash purchase of April 14, OMR 500.
18	Purchased watches from Qasim Company OMR 5,000, terms 3/10, n/30, FOB shipping point.
20	Paid freight on April 18 purchase OMR 200.
23	Sold watches for cash to customers OMR 8,000. The cost of the merchandise sold was OMR 5,600.
26	Purchased watches for cash OMR 2,000.
30	Made refunds of cash to customers for returned watches OMR 200. The returned watches had a cost of OMR 100.

Question 2:

1. You are required to prepare journal entries to record the transactions, when the company uses;
   1. Periodic Inventory System, and (3.5 Marks)
   2. Perpetual Inventory System. (3.5 Marks)
2. Explain how adjusting entries are useful to update permanent accounts? (3 Marks)