Question

Click Computers has the following transactions in July related to purchasing and sale of merchandise inventory.

July 1 Purchase of \(20,500 worth of computers on account, terms of 2/10, n/30.

3 Return of \)4,000 of the computers to the vendor.

9 Payment made on the account.

12 Sold computers on account for $8,000 to a customer, terms 3/15, n/30.

26 Received payment from customer on balance due.

Journalize the transactions for Click Computers assuming that the company uses the periodic inventory system.

Short answer

The total debit and credit of the journal are $56,760.

Step-by-step solution

Meaning of Periodic Inventory System

An inventory system that periodically updates the inventory transactions is termed a periodic inventory system. Under this system, a business entity updates its inventory accounts at the end of an accounting period and tracks its beginning and closing inventories.

Preparation of journal entries

Date	Accounts and Explanation	Debit ($)	Credit ($)
July 1	Purchases	20,500
	Accounts payable		20,500
	(To record the purchase of computers)
July 3	Accounts payable	4,000
	Purchase return		4,000
	(To record the return of goods)
July 9	Accounts payable	16,500
	Cash		16,170
	Purchase discount		330
	(To record the payment within the discount period)
July 12	Accounts receivable	8,000
	Sales revenue		8,000
	(To record the sale of computers)
July 26	Cash	7,760
	Sales discount	240
	Accounts receivable		8,000
	(Cash received within the discount period)