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1. Journalize the foregoing transactions using both periodic and perpetual methods / system

2. Prepare the statement of financial performance for both methods.

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Periodic VS Perpetual Income Statement ABC GENERAL MERCHANDISING Statement of Financial Performance For the period ending December 31, 20CY PERIODIC INVENTORY METHOD 10,000 500 1,000 1,500 8,500 1,000 Revenue Gross Sales Less: Sales Discount Sales Return and Allowances Net Sales cost of Goods Sold Merchandise Inventory - Beginning Add: Purchases Less: Purchases Discount Purchases Returns and Allowances Net Purchases Transportation in Goods Available for Sale Less: Merchandise Inventory - End Cost of Goods Sold 10,000 150 2,000 2,150 7,850 150 9,000 2,000 7,000 1,500 Gross Profit Operating Expenses Selling Expense 100 Administrative Expenses 150 Total Operating Expenses 250 income From Operations Other Income and Expenses 1,250 250 NET INCOME BEFORE TAXES Provisions for Taxes 1,500 10 NET INCOME AFTER TAXES 1,490 ABC GENERAL MERCHANDISING Statement of Financial Performance For the period ending December 31, 20CY PERPETUAL INVENTORY METHOD 10,000 Revenue Gross Sales Less: Sales Discount Sales Return and Allowances Net Sales 500 1,000 1,500 8,500 Cost of Good Sold 7,000 Gross Profit 1,500 Operating Expenses Selling Expense 100 Administrative Expenses 150 Total Operating Expenses 250 Income From Operations Other Income and Expenses 1,250 250 NET INCOME BEFORE TAXES Provisions for Taxes 1,500 10 NET INCOME AFTER TAXES 1,490 Periodic VS Perpetual Income Statement ABC GENERAL MERCHANDISING Statement of Financial Performance For the period ending December 31, 20CY PERIODIC INVENTORY METHOD 10,000 500 1,000 1,500 8,500 1,000 Revenue Gross Sales Less: Sales Discount Sales Return and Allowances Net Sales cost of Goods Sold Merchandise Inventory - Beginning Add: Purchases Less: Purchases Discount Purchases Returns and Allowances Net Purchases Transportation in Goods Available for Sale Less: Merchandise Inventory - End Cost of Goods Sold 10,000 150 2,000 2,150 7,850 150 9,000 2,000 7,000 1,500 Gross Profit Operating Expenses Selling Expense 100 Administrative Expenses 150 Total Operating Expenses 250 income From Operations Other Income and Expenses 1,250 250 NET INCOME BEFORE TAXES Provisions for Taxes 1,500 10 NET INCOME AFTER TAXES 1,490 ABC GENERAL MERCHANDISING Statement of Financial Performance For the period ending December 31, 20CY PERPETUAL INVENTORY METHOD 10,000 Revenue Gross Sales Less: Sales Discount Sales Return and Allowances Net Sales 500 1,000 1,500 8,500 Cost of Good Sold 7,000 Gross Profit 1,500 Operating Expenses Selling Expense 100 Administrative Expenses 150 Total Operating Expenses 250 Income From Operations Other Income and Expenses 1,250 250 NET INCOME BEFORE TAXES Provisions for Taxes 1,500 10 NET INCOME AFTER TAXES 1,490

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