- Practice question - Purchase Prepare journal entries for each of the following transactions. Assume a perpetual merchandise inventory system. October 6: Purchased 650 units of merchandise inventory at $5 per unit. The seller offered a cash discount of 2/10, n/30. October 8: Returned 25 defective units and received full credit. October 10: Paid the amount in full, less the returned items. FIFO Eample A company that uses a perpetual merchandise inventory system made the following cash purchases and sales: Jan. 1-Purchased 100 units at $10 per unit. OFeb. 5-Purchased 60 units at $12 per unit. Mar.16-Sold for cash 40 units for $16 per unit. Prepare journal entries to record the sale assuming a FIFO system is used. Cash Sales Cost of goods sold Merchandise Inventory