Perpetual Inventory System Journal Entries
Firstly, we must know about what is perpetual Inventory system? It is a system in which all Business Transactions related to value of inventory are updated on daily and regularly basis at once when these occur in working business time. All Purchases of Merchandise, sales, closing Inventory are regularly updated. Following Inventory Journal Entries are passed under Perpetual Inventory System: Purchase of Clothes When an Entrepreneur doing retail business of cloths purchases 10 pieces of Clothes on credit from his / her supplier or Accounts Payable for Rs.1000, then he / she records the following Journal Entry in his / her Inventory Journal: Inventory a/c 10000 Accounts Payable a/c 10000 (10 Pieces of Clothes Purchased at the rate of Rs.1000 from Accounts Payable) Sales of Clothes Suppose, three cloths are sold on c...