PRACTICE TOPIC
Merchandising Transactions
Practice Merchandising Transactions with 8 accounting challenges on Accountely — instant IAS/IFRS-compliant scored feedback on every submission.
What merchandising transactions covers
Merchandising transactions are the individual purchases, sales, returns, allowances, discounts and freight charges that make up trading activity. Each has a specific treatment, and whether freight is a cost of inventory or a selling expense depends on the delivery terms agreed.
Challenges here ask for the journal entries under both perpetual and periodic systems.
Where marks are usually lost
- Treating freight out as part of inventory cost — it is a selling expense.
- Omitting the cost of goods sold entry on a sale under a perpetual system.
- Recording a purchase discount as income rather than a reduction of inventory cost.
8 Merchandising Transactions practice challenges
TitleTypeDifficulty
Orion Trading Ltd. — A Month of Transactions JournalmediumBeaumont Wholesale - Periodic System: Journal, Cash Ledger and Trial Balance Multi-StatementmediumBluestone Traders - Merchandising Cycle: Journal, Ledgers and Trial Balance Multi-StatementhardGlenmore Stores - Inventory at the Lower of Cost and Net Realizable Value JournalmediumCedarbrook Traders — Accounts Payable and Inventory (T-Accounts) LedgermediumHarborview Trading - Periodic System: Income Statement and Balance Sheet Multi-StatementhardNorthwind Tech - Revenue Recognition: Multiple Performance Obligations, Advances and Consignment JournalhardFenwick Hardware Store — First Month of Trading (T-Accounts) Ledgerhard