terms:

Listed below are selected examples of transactions related to the purchase and sale of inventory from the perspective of the seller or the buyer as indicated. Assume a perpetual inventory system is in use. 1. Buyer: Purchase of $3,500 of inventory for cash. 2. Buyer: Return of $780 of inventory to seller for credit on account. 3. Buyer: Purchase of $4,160 of inventory on account, terms 2/10,n/45. 4. Buyer: Payment of $440 cash for freight on purchase of inventory (FOB shipping point). 5. Buyer: Payment of amount owed for purchase of $3,500 of inventory, terms 2/10,n/30, paid within discount period. 6. Seller: Sale of inventory on account, terms n/30. Selling price $10,400; cost $4,160. Management expects a return rate of 7.50%. 7. Seller: Return of damaged inventory from buyer for cash. Selling price $560; cost $236. All these goods were discarded because they are not resaleable. 8. Seller: Payment of $600 cash for freight on sale of inventory (FOB destination). 9. Seller: Return of unwanted inventory from buyer for credit on account. Selling price $440; cost $164. Goods restored to inventory for future resale. 10. Seller: Receipt of payment ($8,320) from customer on account, terms n/30. Account Debited (a) Basic Type of Account 1. Asset 2. 3. 4. 5. 6. 7. 8. 9. (b) Specific Account Inventory $ $ Amount $3,500 10. 10. (c) (a) Basic Type of Account Asset $ $ $ $ $ $ $ $ $ Account Credited (b) Specific Account Cash Cash Inventory (c) Amount $3,500 $ $ $ $ $ $ $ $ $ $ $ $ $ $ (a) Basic Type of Account Asset Asset Contra Sales Expense Liability Revenue Specific Account Inventory Accounts Payable Accounts Receivable. Cash Cost of Goods Sold Estimated Inventory Returns Freight Out Inventory Refund Liability Sales Sales Return and Allowances