Q5-28RQ - Horngren'S Financial And Managerial Accounting

Question

Describe the journal entry(ies) when recording a sale of inventory using the periodic inventory system.

Step-by-Step Solution

Answer

In the periodic inventory system, the sales account is credited to record the sale of inventory.

Meaning of Sale of Inventory

The term “sale of inventory” refers to the transfer of ownership of inventory from the seller to the buyer. In this process, the seller is entitled to receive the consideration amount, and the buyer is responsible for making the payment against the inventory acquired. 

Journal entry to record the sale of inventory under the periodic inventory system

Journal entry to record the sale of inventory is as follows: 

Date	Accounts and Explanation	Debit ($)	Credit ($)
	Accounts receivable	XXX
	Sales		XXX
	(To record the sale of inventory)