Assume that Merryland’s Markets had an inventory balance of $32 570 at the close of the last accounting period. The following sales and purchase transactions are for the current period:
1. Purchased goods on account for $27 190.
2. Returned part of the above purchase that had an original purchase price of $1590.
3. Paid for the balance of the purchase in time to receive a discount of 2% of the purchase price.
4. Sold goods costing $24 900 for $49 820. Cash of $23 000 was received, with the balance due on account.
5. Goods sold on credit for $2020 (cost $1010) were returned.
Required
A. In two columns, prepare general journal entries (ignoring GST) assuming:
1. a periodic inventory system is used
2. a perpetual inventory system is used.
B. Same as for requirement A, except that GST is to be added to the figures where appropriate.
C. Suppose that a physical count of the inventory at the end of the current period shows inventory of $30000 to be on hand. Present the entries (if any) required under each inventory system to adjust for any discrepancy.
D. Comment on which system would best disclose any discrepancy.
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