Double entry system --- stock / inventory

A) Inventory account

 Only used if all sale of stock were at cost price

 But most sales are not at cost price, so the difference between the 2 sides of
the inventory account would not represent the balance of stock in hand.

B) Accounts used all transactions relating to stock

Transactions Accounts to be used entries

Purchases of goods from Purchases account Debit

supplier
Returns of goods to supplier Purchases returns / Returns Credit
outwards account

Sales of goods to customers Sales account Credit

Returns of goods from Sales returns / Debit

customers Returns inwards account

C) 1. Complete the following table:

Account to Account to
be debited be credited
(a) Goods bought on credit from J Reid

(b) Goods sold on credit to B Perkins

(c) Van bought on credit from H Thomas

(d) Goods sold, a cheque being received

immediately

(e) Goods sold for cash

(f) Goods purchased by us returned to

supplier, H Hardy

(g) Machinery sold for cash

(h) Goods sold returned to us by customer,

J Nelson

(i) Goods bought on credit from D

Simpson
 (j) Owner took goods for personal use

2. Enter the following transactions in the appropriate accounts:

2012
Aug 1 Started business with £10,000 cash.
2 Paid £9,000 of the opening cash into the bank.
4 Bought goods on credit £780 from H Steven.
5 Bought a van by cheque£5,000.
7 Bought goods for cash £550.
10 Sold goods on credit £980 to D Moore.
12 Returned goods to H Steven £180.
15 received goods returned by D Moore £120.
19 Sold goods for cash £280.
22 Bought fixtures on credit from Kingston Co. £1,500.
24 D Watson lent us £1,000 paying us the money by cheque.
29 We paid H Steven his account by cheque£600.
31 We paid Kingston Co. by cheque£1,500.