Periodic Inventory System Journal Entries
Firstly, we are interested to know “what is Periodic Inventory System”. Basically, it is a system in which value of inventory are not updated daily rather than it is recorded at the end of Accounting Period. You may also be interested in Perpetual Inventory System Journal Entries . We record Following Business Transactions related to Under Periodic Inventory System: Purchase of Merchandise Suppose an Entrepreneur purchases 10 pieces of clothes on Credit from his / her supplier or Accounts Payable during the current accounting period 2016. The rate of these clothes are Rs.1000. We record the following Journal Entry at the end of Accounting Period: Purchases a/c 10000 Accounts Payable a/c 10000 Purchased 10 Pieces of Clothes at the rate of Rs.1000 From Accounts Payable Sales of Merchandise Now the entrepreneur sold on credit, the 5 pieces of clothes at the rate of Rs.2000 to his / her customers or Accounts Receivable ,