quired Clearly Optis expects to grow rapidly and increase its level of inventory. As accountant of the coinpany, you wish to install a perpetual inventory system. Write a o to the company president to explain how the system would work. Use the following heading for your memo: Date: To: From: Subject: Company President Chief Accountant How a perpetual inventory system works Problem 5-2B The following transactions occurred between Cloutier Pharmaceuticals and Arnold Drug Stores during June of the current year: Accounting for the purchase and sale of inventory under the perpetual inventory system 2 Jun. 8 Arnold purchased $29,400 of merchandise from Cloutier on credit terms 2/10, n/30, FOB shipping point. Separately, Arnold paid freight-in of $600. Cloutier invoiced Arnold for $29,400. These goods cost Cloutier $12,600. Arnold returned $3,600 of the merchandise purchased on June 8. Cloutier issued a credit memo for this amount and returned the goods, in excellent condition, to inventory (cost $1,500). Arnold paid $12,000 of the invoice amount owed to Cloutier for the June 8 purchase. This payment included none of the freight charge. Arnold took the purchase discount on the partial payment. Arnold paid the remaining amount owed to Cloutier for the June 8 purchase. 26 Required Journalize these transactions, first on the books of Arnold Drug Stores, and w on the books of Cloutier Pharmaceuticals. Both companies use the perpetual inven- tory system. Probl. w alinin nurchase and sale