Case - 2: 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 1 Purchased perfumes on account for OMR 1,000 from Basim, terms 1/10, n/60. 3 Sold perfumes on account to the Mahamad for OMR 1,000. The cost of the perfumes sold was OMR 700. 6 Received OMR 50 credit for perfumes returned to Basim. 9 Paid Basim in full 15 Received payment in full from Mahamad, 17 Sold perfumes on account to Amar for OMR 1,000. The cost of the perfumes sold was OMR 700. 18 Amar returned OMR 100 of perfumes sold. The cost of perfumes sold was OMR 70. 20 Purchased perfumes on account for 700 from Charles, terms 2/15, n/30, FOB shipping point 24 Received payment in full from Amar. 26 Paid for the freight charges on the perfumes purchased on April 20, OMR 40. 28 Sold perfumes on account to Nasir for OMR 1,200. The cost of the perfumes sold was OMR 840. 29 Granted Nasir OMR 130 credit for perfumes returned costing OMR 90. 30 Received payment in full from Nasir. Question - 2: a. You are required to prepare journal entries to record the transactions, when the company uses; i. Periodic Inventory System, and (3.5 Marks) ii. Perpetual Inventory System. (3.5 Marks) b. Why do companies prefer perpetual inventory system over periodic inventory system? Explain (3 Marks) Case - 2: 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 1 Purchased perfumes on account for OMR 1,000 from Basim, terms 1/10, n/60. 3 Sold perfumes on account to the Mahamad for OMR 1,000. The cost of the perfumes sold was OMR 700. 6 Received OMR 50 credit for perfumes returned to Basim. 9 Paid Basim in full 15 Received payment in full from Mahamad, 17 Sold perfumes on account to Amar for OMR 1,000. The cost of the perfumes sold was OMR 700. 18 Amar returned OMR 100 of perfumes sold. The cost of perfumes sold was OMR 70. 20 Purchased perfumes on account for 700 from Charles, terms 2/15, n/30, FOB shipping point 24 Received payment in full from Amar. 26 Paid for the freight charges on the perfumes purchased on April 20, OMR 40. 28 Sold perfumes on account to Nasir for OMR 1,200. The cost of the perfumes sold was OMR 840. 29 Granted Nasir OMR 130 credit for perfumes returned costing OMR 90. 30 Received payment in full from Nasir. Question - 2: a. You are required to prepare journal entries to record the transactions, when the company uses; i. Periodic Inventory System, and (3.5 Marks) ii. Perpetual Inventory System. (3.5 Marks) b. Why do companies prefer perpetual inventory system over periodic inventory system? Explain
