{"id":200,"date":"2024-09-06T16:47:26","date_gmt":"2024-09-06T16:47:26","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/sales-under-a-perpetual-system\/"},"modified":"2024-09-11T19:12:29","modified_gmt":"2024-09-11T19:12:29","slug":"sales-under-a-perpetual-system","status":"publish","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/sales-under-a-perpetual-system\/","title":{"raw":"Sales under a Perpetual System","rendered":"Sales under a Perpetual System"},"content":{"raw":"<section class=\"textbox learningGoals\" aria-label=\"Learning Goals\">\r\n<ul>\r\n \t<li>Record sales using a perpetual system<\/li>\r\n<\/ul>\r\n<\/section>&nbsp;\r\n\r\nApproaching the end of the year, here is the state of affairs as we have described them so far. We have ignored sales and other purchases in order to keep things simple, but now let\u2019s record a sale of inventory from our stock in hand.\r\n<table class=\"fin-table tchart\"><caption>Inventory<\/caption>\r\n<thead>\r\n<tr>\r\n<th class=\"u-sr-only\" scope=\"col\">Debit<\/th>\r\n<th class=\"u-sr-only\" scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td class=\"r\">223,562.50<\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td class=\"r\">20,700.00<\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">4,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">320.00<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<tfoot>\r\n<tr>\r\n<td class=\"r\"><span class=\"u-sr-only\">Double line<\/span> 239,942.50<\/td>\r\n<td class=\"r\"><span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tfoot>\r\n<\/table>\r\n<div align=\"left\">\r\n<table class=\"fin-table gridded\"><caption>Inventory List<\/caption>\r\n<tbody>\r\n<tr>\r\n<td style=\"text-align: left;\" colspan=\"5\"><strong>Geyer, Co.<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"text-align: right;\" colspan=\"5\"><strong>12\/19\/20XX<\/strong><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"col\">Product ID<\/th>\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Cost<\/th>\r\n<th scope=\"col\">Quantity in Stock<\/th>\r\n<th scope=\"col\">Total Inventory Value<\/th>\r\n<\/tr>\r\n<tr>\r\n<td>A101<\/td>\r\n<td>Wiring harness<\/td>\r\n<td>99.00<\/td>\r\n<td>30<\/td>\r\n<td>2,970.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>CAB 500<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>58.00<\/td>\r\n<td>500<\/td>\r\n<td>29,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>CAB 600<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>99.00<\/td>\r\n<td>15<\/td>\r\n<td>1,485.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>MMM 333<\/td>\r\n<td>GPS enabled sound system<\/td>\r\n<td>1,255.50<\/td>\r\n<td>65<\/td>\r\n<td>81,607.50<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Rel 5<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>110.00<\/td>\r\n<td>100<\/td>\r\n<td>11,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>RFS-212<\/td>\r\n<td>GPS enabled sound system<\/td>\r\n<td>650.00<\/td>\r\n<td>150<\/td>\r\n<td>97,500.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>XPS-101<\/td>\r\n<td>GPS enabled sound system<\/td>\r\n<td>102.375<\/td>\r\n<td>160<\/td>\r\n<td>16,380.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th colspan=\"4\" scope=\"row\">Total Inventory Value<\/th>\r\n<td>$ 239,942.50<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nWe\u2019ll sell one MMM-333 sound system and nothing else, again, for illustrative purposes and to keep things simpler than they are in real life. We\u2019ll use the gross method: we\u2019ll sell to retail customers who use a debit or credit card, and we\u2019ll collect 8% state and local combined sales tax.\r\n\r\nHere is the journal entry:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><span style=\"float: right;\">Page 101<\/span><\/caption>\r\n<thead>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"col\">Date<\/th>\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Post. Ref.<\/th>\r\n<th scope=\"col\">Debit<\/th>\r\n<th scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>20--<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">Dec 31<\/th>\r\n<td>Checking Account<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">2,159.99<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Dec 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Sales Taxes Payable<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">160.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Dec 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Sales Revenue<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">1,999.99<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Dec 31<\/span><\/th>\r\n<td>Cost of Goods Sold<\/td>\r\n<td><\/td>\r\n<td class=\"r\">1,255.50<\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Dec 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Merchandise Inventory<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">1,255.50<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Dec 31<\/span><\/th>\r\n<td>To record sale of MMM-333 to Paul Smith<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nA lot is going on here, and this entry could be two journal entries, but often it\u2019s not. Here we\u2019ve violated the rule of debits first and then credits, simply in order to help clarify the entry.\r\n<ol>\r\n \t<li style=\"font-weight: 400;\">The deposit to the checking account includes both the sales price of $1,999.99 and the sales tax collected on behalf of the taxing authority (the state, in this case). The seller is required to collect that money from the buyer and then send it to the state on the buyer\u2019s behalf because the state doesn\u2019t trust the buyer to fill out the forms and remit the sales and use tax. That $160 is a payable because it is not our money. We owe it to the state and the state tax enforcement agents will come after us if we don\u2019t send it in on time.<\/li>\r\n \t<li style=\"font-weight: 400;\">Every time we make a sale under the perpetual system of accounting, we move the cost of the item sold from the asset account Merchandise Inventory to COGS, mirroring the actual movement of the product from the shelf into the hands (and the car) of the buyer. We recognize revenue as earned (when title passes as we hand over the goods) and the expense as it matches the revenue.<\/li>\r\n<\/ol>\r\nPosting the journal entry updates our ledgers by removing the cost of one sound system:\r\n<table class=\"fin-table tchart\"><caption>Inventory<\/caption>\r\n<thead>\r\n<tr>\r\n<th class=\"u-sr-only\" scope=\"col\">Debit<\/th>\r\n<th class=\"u-sr-only\" scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td class=\"r\">223,562.50<\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td class=\"r\">20,700.00<\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">4,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">320.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r highlight\">1,255.50<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<tfoot>\r\n<tr>\r\n<td class=\"r\"><span class=\"u-sr-only\">Double line<\/span> 238,687.00<\/td>\r\n<td class=\"r\"><span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tfoot>\r\n<\/table>\r\n<div align=\"left\">\r\n<table class=\"fin-table gridded\"><caption>Inventory List<\/caption>\r\n<tbody>\r\n<tr>\r\n<td style=\"text-align: left;\" colspan=\"5\"><strong>Geyer, Co.<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"text-align: right;\" colspan=\"5\"><strong>12\/19\/20XX<\/strong><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"col\">Product ID<\/th>\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Cost<\/th>\r\n<th scope=\"col\">Quantity in Stock<\/th>\r\n<th scope=\"col\">Total Inventory Value<\/th>\r\n<\/tr>\r\n<tr>\r\n<td>A101<\/td>\r\n<td>Wiring harness<\/td>\r\n<td>99.00<\/td>\r\n<td>30<\/td>\r\n<td>2,970.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>CAB 500<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>58.00<\/td>\r\n<td>500<\/td>\r\n<td>29,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>CAB 600<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>99.00<\/td>\r\n<td>15<\/td>\r\n<td>1,485.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td class=\"highlight\">MMM 333<\/td>\r\n<td class=\"highlight\">GPS enabled sound system<\/td>\r\n<td class=\"highlight\">1,255.50<\/td>\r\n<td class=\"highlight\">64<\/td>\r\n<td class=\"highlight\">80,352.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Rel 5<\/td>\r\n<td>HQ Speakers<\/td>\r\n<td>110.00<\/td>\r\n<td>100<\/td>\r\n<td>11,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>RFS-212<\/td>\r\n<td>GPS enabled sound system<\/td>\r\n<td>650.00<\/td>\r\n<td>150<\/td>\r\n<td>97,500.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>XPS-101<\/td>\r\n<td>GPS enabled sound system<\/td>\r\n<td>102.375<\/td>\r\n<td>160<\/td>\r\n<td>16,380.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th colspan=\"4\" scope=\"row\">Total Inventory Value<\/th>\r\n<td>$ 238,687.00<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nAlthough we don\u2019t use Purchases and the related contra accounts under the perpetual method, the revenue accounts are the same.\r\n<div align=\"left\">\r\n<table><caption>Gross Method<\/caption>\r\n<tbody>\r\n<tr>\r\n<th scope=\"col\">Periodic Method<\/th>\r\n<th scope=\"col\">Perpetual Method<\/th>\r\n<\/tr>\r\n<tr>\r\n<td>Sales Revenue\u2014gross sales are posted here as a credit<\/td>\r\n<td>Sales Revenue\u2014gross sales are posted here as a credit<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Sales Discounts (Contra Account)\u2014sales discounts are posted here as a debit<\/td>\r\n<td>Sales Discounts (Contra Account)\u2014sales discounts are posted here as a debit<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Sales Returns and Allowances (Contra Account)\u2014sales returns and allowances are posted here as a debit<\/td>\r\n<td>Sales Returns and Allowances (Contra Account)\u2014sales returns and allowances are posted here as a debit<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n<div align=\"left\">\r\n<table><caption>Net Method<\/caption>\r\n<tbody>\r\n<tr>\r\n<th scope=\"col\">Periodic Method<\/th>\r\n<th scope=\"col\">Perpetual Method<\/th>\r\n<\/tr>\r\n<tr>\r\n<td>Sales Revenue\u2014net sales are posted here as a credit<\/td>\r\n<td>Sales Revenue\u2014net sales are posted here as a credit<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Sales Discounts Forfeited\u2014sales discounts not claimed by the customer are posted here as a credit<\/td>\r\n<td>Sales Discounts Forfeited\u2014sales discounts not claimed by the customer are posted here as a credit<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Sales Returns and Allowances (Contra Account)\u2014sales returns and allowances are posted here as a debit<\/td>\r\n<td>Sales Returns and Allowances (Contra Account)\u2014sales returns and allowances are posted here as a debit<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<section class=\"textbox tryIt\" aria-label=\"Try It\">[ohm2_question hide_question_numbers=1]25172[\/ohm2_question][ohm_question hide_question_numbers=1]204606[\/ohm_question]<\/section><\/div>\r\nNext, we\u2019ll see how the perpetual method can be used for inventory control.","rendered":"<section class=\"textbox learningGoals\" aria-label=\"Learning Goals\">\n<ul>\n<li>Record sales using a perpetual system<\/li>\n<\/ul>\n<\/section>\n<p>&nbsp;<\/p>\n<p>Approaching the end of the year, here is the state of affairs as we have described them so far. We have ignored sales and other purchases in order to keep things simple, but now let\u2019s record a sale of inventory from our stock in hand.<\/p>\n<table class=\"fin-table tchart\">\n<caption>Inventory<\/caption>\n<thead>\n<tr>\n<th class=\"u-sr-only\" scope=\"col\">Debit<\/th>\n<th class=\"u-sr-only\" scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td class=\"r\">223,562.50<\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<td class=\"r\">20,700.00<\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<td class=\"r\"><\/td>\n<td class=\"r\">4,000.00<\/td>\n<\/tr>\n<tr>\n<td class=\"r\"><\/td>\n<td class=\"r\">320.00<\/td>\n<\/tr>\n<\/tbody>\n<tfoot>\n<tr>\n<td class=\"r\"><span class=\"u-sr-only\">Double line<\/span> 239,942.50<\/td>\n<td class=\"r\"><span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tfoot>\n<\/table>\n<div style=\"text-align: left;\">\n<table class=\"fin-table gridded\">\n<caption>Inventory List<\/caption>\n<tbody>\n<tr>\n<td style=\"text-align: left;\" colspan=\"5\"><strong>Geyer, Co.<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: right;\" colspan=\"5\"><strong>12\/19\/20XX<\/strong><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"col\">Product ID<\/th>\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Cost<\/th>\n<th scope=\"col\">Quantity in Stock<\/th>\n<th scope=\"col\">Total Inventory Value<\/th>\n<\/tr>\n<tr>\n<td>A101<\/td>\n<td>Wiring harness<\/td>\n<td>99.00<\/td>\n<td>30<\/td>\n<td>2,970.00<\/td>\n<\/tr>\n<tr>\n<td>CAB 500<\/td>\n<td>HQ Speakers<\/td>\n<td>58.00<\/td>\n<td>500<\/td>\n<td>29,000.00<\/td>\n<\/tr>\n<tr>\n<td>CAB 600<\/td>\n<td>HQ Speakers<\/td>\n<td>99.00<\/td>\n<td>15<\/td>\n<td>1,485.00<\/td>\n<\/tr>\n<tr>\n<td>MMM 333<\/td>\n<td>GPS enabled sound system<\/td>\n<td>1,255.50<\/td>\n<td>65<\/td>\n<td>81,607.50<\/td>\n<\/tr>\n<tr>\n<td>Rel 5<\/td>\n<td>HQ Speakers<\/td>\n<td>110.00<\/td>\n<td>100<\/td>\n<td>11,000.00<\/td>\n<\/tr>\n<tr>\n<td>RFS-212<\/td>\n<td>GPS enabled sound system<\/td>\n<td>650.00<\/td>\n<td>150<\/td>\n<td>97,500.00<\/td>\n<\/tr>\n<tr>\n<td>XPS-101<\/td>\n<td>GPS enabled sound system<\/td>\n<td>102.375<\/td>\n<td>160<\/td>\n<td>16,380.00<\/td>\n<\/tr>\n<tr>\n<th colspan=\"4\" scope=\"row\">Total Inventory Value<\/th>\n<td>$ 239,942.50<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>We\u2019ll sell one MMM-333 sound system and nothing else, again, for illustrative purposes and to keep things simpler than they are in real life. We\u2019ll use the gross method: we\u2019ll sell to retail customers who use a debit or credit card, and we\u2019ll collect 8% state and local combined sales tax.<\/p>\n<p>Here is the journal entry:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><span style=\"float: right;\">Page 101<\/span><\/caption>\n<thead>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"col\">Date<\/th>\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Post. Ref.<\/th>\n<th scope=\"col\">Debit<\/th>\n<th scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>20&#8211;<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">Dec 31<\/th>\n<td>Checking Account<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">2,159.99<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Dec 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Sales Taxes Payable<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">160.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Dec 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Sales Revenue<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,999.99<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Dec 31<\/span><\/th>\n<td>Cost of Goods Sold<\/td>\n<td><\/td>\n<td class=\"r\">1,255.50<\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Dec 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Merchandise Inventory<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,255.50<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Dec 31<\/span><\/th>\n<td>To record sale of MMM-333 to Paul Smith<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>A lot is going on here, and this entry could be two journal entries, but often it\u2019s not. Here we\u2019ve violated the rule of debits first and then credits, simply in order to help clarify the entry.<\/p>\n<ol>\n<li style=\"font-weight: 400;\">The deposit to the checking account includes both the sales price of $1,999.99 and the sales tax collected on behalf of the taxing authority (the state, in this case). The seller is required to collect that money from the buyer and then send it to the state on the buyer\u2019s behalf because the state doesn\u2019t trust the buyer to fill out the forms and remit the sales and use tax. That $160 is a payable because it is not our money. We owe it to the state and the state tax enforcement agents will come after us if we don\u2019t send it in on time.<\/li>\n<li style=\"font-weight: 400;\">Every time we make a sale under the perpetual system of accounting, we move the cost of the item sold from the asset account Merchandise Inventory to COGS, mirroring the actual movement of the product from the shelf into the hands (and the car) of the buyer. We recognize revenue as earned (when title passes as we hand over the goods) and the expense as it matches the revenue.<\/li>\n<\/ol>\n<p>Posting the journal entry updates our ledgers by removing the cost of one sound system:<\/p>\n<table class=\"fin-table tchart\">\n<caption>Inventory<\/caption>\n<thead>\n<tr>\n<th class=\"u-sr-only\" scope=\"col\">Debit<\/th>\n<th class=\"u-sr-only\" scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td class=\"r\">223,562.50<\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<td class=\"r\">20,700.00<\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<td class=\"r\"><\/td>\n<td class=\"r\">4,000.00<\/td>\n<\/tr>\n<tr>\n<td class=\"r\"><\/td>\n<td class=\"r\">320.00<\/td>\n<\/tr>\n<tr>\n<td class=\"r\"><\/td>\n<td class=\"r highlight\">1,255.50<\/td>\n<\/tr>\n<\/tbody>\n<tfoot>\n<tr>\n<td class=\"r\"><span class=\"u-sr-only\">Double line<\/span> 238,687.00<\/td>\n<td class=\"r\"><span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tfoot>\n<\/table>\n<div style=\"text-align: left;\">\n<table class=\"fin-table gridded\">\n<caption>Inventory List<\/caption>\n<tbody>\n<tr>\n<td style=\"text-align: left;\" colspan=\"5\"><strong>Geyer, Co.<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: right;\" colspan=\"5\"><strong>12\/19\/20XX<\/strong><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"col\">Product ID<\/th>\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Cost<\/th>\n<th scope=\"col\">Quantity in Stock<\/th>\n<th scope=\"col\">Total Inventory Value<\/th>\n<\/tr>\n<tr>\n<td>A101<\/td>\n<td>Wiring harness<\/td>\n<td>99.00<\/td>\n<td>30<\/td>\n<td>2,970.00<\/td>\n<\/tr>\n<tr>\n<td>CAB 500<\/td>\n<td>HQ Speakers<\/td>\n<td>58.00<\/td>\n<td>500<\/td>\n<td>29,000.00<\/td>\n<\/tr>\n<tr>\n<td>CAB 600<\/td>\n<td>HQ Speakers<\/td>\n<td>99.00<\/td>\n<td>15<\/td>\n<td>1,485.00<\/td>\n<\/tr>\n<tr>\n<td class=\"highlight\">MMM 333<\/td>\n<td class=\"highlight\">GPS enabled sound system<\/td>\n<td class=\"highlight\">1,255.50<\/td>\n<td class=\"highlight\">64<\/td>\n<td class=\"highlight\">80,352.00<\/td>\n<\/tr>\n<tr>\n<td>Rel 5<\/td>\n<td>HQ Speakers<\/td>\n<td>110.00<\/td>\n<td>100<\/td>\n<td>11,000.00<\/td>\n<\/tr>\n<tr>\n<td>RFS-212<\/td>\n<td>GPS enabled sound system<\/td>\n<td>650.00<\/td>\n<td>150<\/td>\n<td>97,500.00<\/td>\n<\/tr>\n<tr>\n<td>XPS-101<\/td>\n<td>GPS enabled sound system<\/td>\n<td>102.375<\/td>\n<td>160<\/td>\n<td>16,380.00<\/td>\n<\/tr>\n<tr>\n<th colspan=\"4\" scope=\"row\">Total Inventory Value<\/th>\n<td>$ 238,687.00<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>Although we don\u2019t use Purchases and the related contra accounts under the perpetual method, the revenue accounts are the same.<\/p>\n<div style=\"text-align: left;\">\n<table>\n<caption>Gross Method<\/caption>\n<tbody>\n<tr>\n<th scope=\"col\">Periodic Method<\/th>\n<th scope=\"col\">Perpetual Method<\/th>\n<\/tr>\n<tr>\n<td>Sales Revenue\u2014gross sales are posted here as a credit<\/td>\n<td>Sales Revenue\u2014gross sales are posted here as a credit<\/td>\n<\/tr>\n<tr>\n<td>Sales Discounts (Contra Account)\u2014sales discounts are posted here as a debit<\/td>\n<td>Sales Discounts (Contra Account)\u2014sales discounts are posted here as a debit<\/td>\n<\/tr>\n<tr>\n<td>Sales Returns and Allowances (Contra Account)\u2014sales returns and allowances are posted here as a debit<\/td>\n<td>Sales Returns and Allowances (Contra Account)\u2014sales returns and allowances are posted here as a debit<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<div style=\"text-align: left;\">\n<table>\n<caption>Net Method<\/caption>\n<tbody>\n<tr>\n<th scope=\"col\">Periodic Method<\/th>\n<th scope=\"col\">Perpetual Method<\/th>\n<\/tr>\n<tr>\n<td>Sales Revenue\u2014net sales are posted here as a credit<\/td>\n<td>Sales Revenue\u2014net sales are posted here as a credit<\/td>\n<\/tr>\n<tr>\n<td>Sales Discounts Forfeited\u2014sales discounts not claimed by the customer are posted here as a credit<\/td>\n<td>Sales Discounts Forfeited\u2014sales discounts not claimed by the customer are posted here as a credit<\/td>\n<\/tr>\n<tr>\n<td>Sales Returns and Allowances (Contra Account)\u2014sales returns and allowances are posted here as a debit<\/td>\n<td>Sales Returns and Allowances (Contra Account)\u2014sales returns and allowances are posted here as a debit<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<section class=\"textbox tryIt\" aria-label=\"Try It\"><iframe loading=\"lazy\" id=\"ohm25172\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=25172&theme=lumen&iframe_resize_id=ohm25172&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><iframe loading=\"lazy\" id=\"ohm204606\" class=\"resizable\" src=\"https:\/\/ohm.lumenlearning.com\/multiembedq.php?id=204606&theme=lumen&iframe_resize_id=ohm204606&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><\/section>\n<\/div>\n<p>Next, we\u2019ll see how the perpetual method can be used for inventory control.<\/p>\n","protected":false},"author":6,"menu_order":14,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Sales Under a Perpetual System\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"part":186,"module-header":"- Select Header -","content_attributions":[{"type":"original","description":"Sales Under a Perpetual System","author":"Joseph Cooke","organization":"Lumen 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