Question
Harborview Trading uses a periodic inventory system . Its adjusted trial balance at December 31, 2025 is shown below. Account Debit Credit Cash 35,850 Accounts Receivable 41,000 Inventory, January 1 36,000 Prepaid Insurance 3,200 Equipment 75,000 Acc
Statements in this challenge
- Income StatementIncome Statement
- Statement of Financial PositionBalance Sheet
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 2 — Inventories; IFRS 15 — Revenue from Contracts with Customers
Work each transaction from the perspective stated in the question: the same shipment is a purchase to one party and a sale to the other, and the entries are not mirror images because only the seller recognises revenue and cost of sales. Read the credit terms and the freight terms before writing anything.
Common mistakes
- Ignoring the shipping terms — they decide who owns goods in transit and who bears the freight.
- Applying a settlement discount to the gross invoice when returns have already reduced the amount owed.
- Confusing a trade discount, which never enters the records, with a settlement discount, which does.
Further readingIAS 2: costing methods and NRV