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In perpetual inventory system
when we buy goods we record dr inventory Cr payable/cash
when we sell we record dr cash/AR cr sales and dr Cost of sales Cr inventory
In this context how do u record carriage inwards when different items r purchased
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From my understanding carriage inwards is part of the purchase cost.
Thanks for the reply. yes carriage inwards is part of the purchase cost, but in perpetual inventory accounting entries, we dont have to do anything with the purchase account, as seen from my entries. pls someone help me with the entries
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You are welcome! When we buy goods on credit/cash we DEBIT: Purchases and CREDIT: Payables/Cash. When we sell goods we DEBIT: Cash/ Receivables and CREDIT: Sales. The inventory account is created at the end of the reporting period we DEBIT: Invntory A/C and CREDIT: Income and Expense A/C with the value of inventory. Will check what happens with Carriage inwards and how the entries are made.
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