Under the periodic inventory system, the cost of goods sold is equal to the beginning inventory plus the cost of merchandise purchased plus the ending inventory.

Stergell Company had sales of $1,500,000 and related cost of goods sold of $920,000 for the year. Stergell estimates that customers will request refunds and allowances for 1.5% of sales and estimates that merchandise costing $12,000 will be returned. Journalize the adjusting entries on December 31 for the expected customer returns. ​

When merchandise that was sold is returned, a credit to Customer Refunds Payable is made.

The account used to record inventory on hand under a periodic inventory system is

Title to merchandise shipped FOB shipping point passes to the buyer upon delivery of the merchandise to the buyer’s place of business.

Under a periodic inventory system, the cost of inventory on hand at the end of the accounting period is determined by a physical count of the inventory.

The proper entry to journalize the receipt of inventory purchased on account in a periodic inventory system would be

If the ownership of merchandise passes to the buyer at the point when the seller begins to ship the merchandise to the buyer, the terms are stated as FOB destination.

Freight in is the amount paid by the company to deliver merchandise sold to a customer.

In a perpetual inventory system, merchandise returned to vendors reduces the inventory account of the company returning the merchandise.