PSA4.2 Journalise purchase and sale transactions under a perpetual inventory system.

LO2, 3

The Novelty Bookstore distributes hardback books to retail stores and extends credit terms of 2/7, n/30 to all of its customers. During the month of June the following inventory transactions occurred.

June

2

Purchased 130 books on account for $6 each from Reader's World Publishers, terms 1/7, n/30. Also made a cash payment to Classic Couriers of $60 for the freight on this date.

3

Sold 140 books on account to the Book Nook for $12 each.

6

10 books returned to Reader's World Publishers. Received $60 credit.

9

Paid Reader's World Publishers the amount owing.

15

Received payment from the Book Nook.

17

Sold 120 books on account to Read-A-Lot Bookstore for $12 each.

20

Purchased 120 books on account for $6 each from Read More Publishers, terms 2/7, n/30.

24

Received payment of account from Read-A-Lot Bookstore.

26

Paid Read More Publishers the amount owing.

28

Sold 110 books on account to Readers Bookstore for $12 each.

30

Granted Readers Bookstore $180 credit for 15 books returned costing $90. The books were returned into inventory.

Required

1. Journalise the transactions for the month of June for The Novelty Bookstore, using a perpetual inventory system. Assume the cost of each book sold was $6.
2. What are the advantages and disadvantages for The Novelty Bookstore of using a perpetual inventory system as opposed to a periodic system?