ACCT 201 1st Edition Lecture 16Outline of Last Lecture I. Perpetual inventory systemII. Periodic inventory systemOutline of Current LectureIII. Recording purchases of merchandiseCurrent LectureData from example in the book, pg. 262 E5-2The company uses a perpetual inventory system.+DR +CRDR CR-CR -DR A = L + SE9/6 +1650 inv. (DR) +1650 acct. payable (CR)9/9 +50 inv. (DR) -50 cash (CR)9/10 -66 inv. (CR) -66 acct. payable9/12 +690 acct. +690 sales revenue (CR) receivable (DR) -520 inv. (CR) -520 COGS (DR)9/14 -45 acct. -45 sales returns and allowances receivable (CR) +34 inv. -34 COGS9/20 +760 acct. +760 sales revenue receivable (DR)These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.**Sales Returns and Allowances is a contra revenue account to sales revenue, which means it is offset against a revenue account on the income statement. The normal balance of sales returns and allowances is a debit. Companies use a contra account instead of debiting sales revenue, to disclose in the accounts and in the income statement the amount of sales returns and
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