Use the Perpetual Method to report any changes in Inventory.

Name the accounts it may go on, whether it is an increase or decrease, and assets or liability. Also indicate if it goes on common stock or retained earnings.

Asset

=

Liab. +

Stockholder's Equity

Account

Increase

Decrease

Com. Stk

Ret. Earn.

1. Purchased inventory for $137,500 on August 31st. You paid on account. The terms are 1.5/10; N/30

paid $2500 of shipping costs to receive this inventory. You also paid sales tax of $8240

2. Returned some of the inventory for $15,230 on Sept. 5th because it was the incorrect order.

3. On Sept. 5th you paid your vendor the remaining balance on the account.

4. On Sept. 20th, you sold $76,350 of the inventory for $134,600 to a client on account

You paid shipping costs of $500 in cash to ship this to the client

You gave the client 2/10; N/30. Use the Gross Method of reporting

5. The client returns $37,000 of the inventory back to you. The cost of this inventory was $15,604.