JournaldrillMerchandise bought on account
A journal entry exercise from Journaldrill. Solve it with an account picker and debit and credit fields in your browser, and it is checked the moment you submit.
The task
Harbor Outfitters, which uses a perpetual inventory system, buys $8,400 of hiking boots from a supplier on account, terms n/30.
What this exercise teaches
In a perpetual system, merchandise purchases are debited directly to Inventory rather than to a Purchases account. The supplier has not been paid, so Accounts Payable is credited for $8,400. Cost of Goods Sold is recorded only when the boots are sold.
A hint if you get stuck
Under a perpetual system, goods bought for resale go straight into the asset account, and the amount owed is a liability.
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