Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 54 units that cost $37 each. During June, (1) the company purchased 162 units at $37 each, (2) returned 6 units for credit, and (3) sold 135 units at $54 each.

Journalize the June transactions.

June 1

Debit inventory $5,994

Credit accounts payable $5,994

Being entries to record inventory purchased

June 2

Debit accounts payable $222

Credit purchases returns $222

Being entries to record inventory items returned

June 3

Debit Cost of sales $4,995

Credit Inventory $4,995

Being entries to record the cost of goods sold

For the sale,

Debit Cash account $7,290

Credit revenue account $7,290

Being entries to record sales

Explanation:

In the perpetual system of inventory management/valuation, purchases and sales are immediately recorded in the books. When inventory is purchased, debit inventory and credit cash or accounts payable.

Should there be a reason to return some or all of the items purchased, the entries required are debit cash/accounts payable and credit purchases returns.

When inventory is sold, two sets of entries are required. Based on the the inventory side,

Debit Cost of sales and Credit Inventory.

For the sale, Debit cash account and credit revenue account.

June 1 amount

= 162 * $37

= $5,994

June 2 amount returned

= 6 * $37

= $222

June 3

revenue amount = 135 * $54

= $7,290

Cost of sales amount

= 135 * $37

= $4,995