Textbook Notes (362,879)
Canada (158,081)
MGAB01H3 (126)
Liang Chen (50)
Chapter 5.5

Chapter 5.5

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University of Toronto Scarborough
Financial Accounting
Liang Chen

Chapter 5.5 Appendix 5A One key difference in the two systems is when the cost of goods sold. In periodic, revenues from the sale of merchandise are recorded when sales are made, in the same way as perpetual. However, on the sale date, perpetual also allocates the cost of goods sold and the merchandise. Under a periodic system, purchases of merchandise are made in an expense account Purchases rather than merchandise. Freight costs, purchases returns and allowance, and purchase discounts are all separate accounts. Recording Purchases of Merchandise Purchasing DR purchases, CR cash or ap Freight costs DR Freight in, CR cash Purchases returns and allowances DR ap, CR Purchase returns and allowance Purchase discounts DR ap, CR Cash, Purchase discounts Recording Sales of Merchandise Sale DR Sales, CR Cash or AR Freight costs DR freight o
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