Periodic inventory method12/27/2023 ![]() ![]() Under the perpetual inventory system, the inventory balance is constantly updated whenever there is an inventory in or an inventory out. Account Debit Credit Cost of goods sold 000 Inventory 000 Under the perpetual inventory system, we can make the journal entry to record the cost of goods sold by debiting the cost of goods sold account and crediting the inventory account. Cost of goods sold under perpetual inventory system And this is usually done in order to close the company’s accounts at the end of the period after taking the physical count of the ending inventory. However, if we use the periodic inventory system, we usually only make the journal entry to record the cost of goods sold at the end of the accounting period. every time there is a movement of inventory). This is because we need to update the balance of the inventory in the accounting record as the perpetual inventory system requires the inventory balance to be updated perpetually (i.e. In accounting, we usually need to make a journal entry to record the cost of goods sold after the sale of such goods or products if we use the perpetual inventory system in our company. ![]() In a manufacturing company, the cost of goods sold includes the cost of raw materials, cost of labor as well as other overhead costs that are used to produce the goods.Īnd, in the merchandising company, the cost of goods sold is the cost that the company pays to acquire the inventory goods before selling them further to the customers for a margin of profit. Journal entry to record cost of goods sold OverviewĬost of goods sold is the cost of goods or products that the company has sold to the customers. ![]()
0 Comments
Leave a Reply.AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |