TWO INVENTORY SYSTEMS

1. PERIODIC INVENTORY SYSTEM

2. PERPETUAL INVENTORY SYSTEM
The inventory account will show the inventory
on hand at the end of the previous reporting The inventory account will at all times show the
period (or the beginning of this reporting year). cost of goods still on hand.

Cost of sales is calculated at the end of the As inventory is sold, the cost of sales is
reporting period. transferred from the inventory account to the
cost of sales account.
1.1 INVENTORY PURCHASED
2.1 INVENTORY PURCHASED
a) Cash, R200
Bank a) Cash, R200
200 Bank
Purchases 200
200 Inventory
200
a) On credit, R800
Payables control/Creditors control a) On credit, R800
800 Payables control/Creditors control
Purchases 800
800 Inventory
800
1.2 MERCHANDISE RETURNED
(a) example. R200 2.2 MERCHANDISE RETURNED
Payables control/Creditors control (a) example. R200
200 Payables control/Creditors control/
Purchases returns /Returns out 200
200 Inventory
200
1.3 MERCHANDISE SOLD
2.3 MERCHANDISE SOLD
1.3.1 Cash, R800 (cost R600)
Bank 2.3.1 Cash, R800 (cost R600)
800 Bank
Sales 800
800 Sales
800
Inventory
600
Cost of sales
600
1.3.2 On credit, R1 000 (cost R800)
Receivables control/Debtors control 2.3.2 On credit, R1 000 (cost R800)
1 000 Receivables control/Debtors control
Sales 1 000
1 000 Sales
1 000
Inventory
800
Cost of sales
 800
1.4 MERCHANDISE RECEIVED BACK 2.4 MERCHANDISE RECEIVED BACK

1.4.1 A client returned goods R300 (Cost 2.4.1 A client returned goods R300 (Cost
R200) R200)

Receivables control/Debtors control Receivables control/Debtors control

300 300
Sales returns/ Returns in Sales returns/ Returns in
300 300
Inventory
200
Cost of sales
200

1.5 PAID FOR DELIVERY or CUSTOMS 2.5 PAID FOR DELIVERY or CUSTOMS
DUTY ON THE MERCHANDISE DUTY ON THE MERCHANDISE
BOUGHT BOUGHT
a) Example, R100 (a) Example, R100
Bank Bank
100 100
Freight in or Customs duty Inventory
100 100