Whispering Winds Company buys merchandise on account from Ay

Whispering Winds Company buys merchandise on account from Ayayai Company for $710 n . Whispering Winds sells the goods to Elis for $1,230 cash. Use a tabular summary to record the transactions for Whispering Winds Company using a perpetual inventory system. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Assets Liabilities+ Stockholders Equity Retained Earnings Rev. Accts. Common Cash +Inv. Pay Stock Exp.

Solution

It is assumed that all the opening balance was zero before the transactions.

Tabular Summary for recording the transactions (Amount in $)

Retained Earnings = $1,230-$710 = $520

Assets = Liabilities + Stockholders\' Equity

$1,230 = $710 + $520

Particulars	Cash	+	Inv.	=	Accts. Pay.	+	Common Stock	+	Rev.	-	Exp.
Opening Balances	0	+	0	=	0	+	0	+	0	-	0
Purchase of Merchandise on account	-	+	710	=	710	+	-	+	-	-	-
Sale of goods for cash	1,230	+	(710)	=	-	+	-	+	1,230	-	710
Closing Balances	1,230	+	0	=	7,10	+	0	+	1,230	-	710