periodic vs perpetual inventory This is a topic that many people are looking for. thetruthaboutdow.org is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, thetruthaboutdow.org would like to introduce to you Accounting for Beginners #41 / Perpetual Inventory Vs. Periodic Inventory/ Asset / Journal Entry. Following along are instructions in the video below:
“Yo yo. What s good family. My afb family nmy dc ade ler crew this this is cp a strength i am the strongest elation cpa in the nstate of welcome back. If you want to see the best accounting playlist nin.
The world when a google car brain here you can go there you can learn to ndo accounting you can pass your classes you can get your degree. You can make big nmoney you can be a super popular accountant get all the ladies or all the nguys either ones fine. What we re going to do is a what seek a strength see past nrizal s what you re going to do today. I m going to do inventory counting for nbeginners number 41.
That s what we re going to do is there 41. It s right after n40 and we re going to do inventory. Forty and forty which is we started inventory nwe made a purchase we started in red where it s an asset. We bought one widget nin 40 and in 40 41.
The inventory. It s going to be the difference between hold non ii. I m back live jump cutter. It s going to be this 41 inventory difference nbetween perpetual inventory versus periodic inventory now will tell what nkind of my definition.
I thought hey if you want the book definition you can njust google search the definition of these so let me give you kind of my ndefinition of these you re either you have inventory. And you want to sell you nwant to sell some of your inventory. You re going to sell it either going nperpetual inventory or using periodic inventory. Perpetual inventory.
Nthe reflectional inventory ii that s perpetual perpetual perpetual perpetual nit s like keeps on going. A perpetuity annuity. It just it keeps on going you nkeep up you keep up with it you keep up with it perpetually going and the nperpetual. One is where you always keep track of the amount available for sale nand.
The amount sold every sale so you keep on going you keep on going now. I nsay with the way. You know computers are in technology..
That i would have to nassume that most bigger corporations use a perpetual inventory with the computers nand such like that because it would be easy to keep up with your inventory. I or nor. Or you can do periodic inventory once you figure out at certain times. So you njust figure out at you don t you don t keep up with it nperpetually every every time you make a transaction keep up the inventory you nperiodically do that certain times.
Certain times for inventory. If you don t nknow like i guess the definition of or you don t know like i m telling you this nand you re like what what the f. But you don t really you don t know perpetual nmeans. Ongoing and periodic means certain times.
So we re talking about inventory nso like if you know that then you re gonna you don t have to row. You don t nhave to write it on on your paper every morning with dcl or i m sorry and go nover gc lips. This is your first time i m sorry but this is my mapping system and nit s a debit credit asset or expense level every revenue is the mapping nsystem to keep everything straight inventories. An asset that s for awhile nso you re going to write down your paper every morning.
Regardless. If you know nyou re just going to do that and you re going to write other stuff every morning nand you know stuff that you can t remember so you get an inventory. So when nyou re doing your homework. And you get an inventory problem.
So you can t nremember. This. But in the morning. You ve been writing perpetual inventory.
Um. You nknow keep track keep track. All the time. Periodic inventory.
Keep track certain ntimes. So you wrote that you re like him. And can t remember behaviors or nquestions..
So you look at your sheet. And then that helps with the answer and nafter a couple more times. You re like i don t need this extra sheet you know i nknow. What the difference between perpetual and periodic is so i guess nit s kind of like a laugh now laugh now cry later think you re going to put in nsome more time and figure out your inventory currently or are you gonna you nknow not take the time now and you re going to take it and you re going to nfigure anything out later let s jump in i want to do one more thing when you re nselling when you re selling when you re selling widgets.
I know i wanted a widget nright last time but anyways. This is the only thing. Our company sells is their nonly inventories widgets as the widget. We buy these for five hundred and we nsell for a thousand 500 sell high debt that they did right we get these widgets nfrom a different different manufacturers we get home sometimes and big bulk amounts sometimes nwe get them in smaller amounts.
Sometimes. So i mean if you buy a big shipment it ncosts more money. I m just trying to get sometimes inflation. I m just trying to nsay that this is all we buy and sell as these widgets.
So they re not always nthey re not always going to be 500. Sometimes they re going to be you know nwe buy a thousand of them they re going to be 482 peaks 480 dollars a piece nsometimes maybe there s a drought maybe you know maybe like the plugs. Dry gotta ngo. A different plug and you know i m saying.
He s sitting on he sit on these nwidgets during the drought. So my dogs to get them for five all day long. He s a nyellow 50 player. I m like now take your leave at hoani.
So what i m saying is nthese. Are widgets are not going to cost the same every time nso in accounting. We re going to get into this your ears are going to value how nmuch you re going to value how much each widget each widget costs you by fifo nlifo or weighted average. Because they all don t bail them they ll don t cost nthe same for in our per for in our example right now.
We ve only we only nbought one we only bought one widget for five hundred dollars. So that s that s nhow much per widget. We either you know fifo lifo or weighted average at nsomething..
There s only one so it cost five hundred so that s how much the as nmuch they cost let s say hey we re going to we re going to sell we re going to nfind itself. We re going to sell our widget for 1000. We re finally going to nsell this widget for 1000. If you do the perpetual.
If you do the perpetual ninventory method. Here is we sold one solar widget by 1 cell. 1. By 1 cell.
1 e nif you got to that if you sold it and our perpetual from keeping up. With neverything. There s going to be 2 c. Lat.
There s more now upfront. There s two two njournal entries for a sale or perpetual now you got 1000. Chippers so you so nyou know you know that you know caching it with our cache caches and that s how nwe re in debit. That four thousand dollars.
We re going to credit a thousand ndollars now what did we get what did we get the cash for we sold we sold a nwidget for a thousand dollars. But now this is the perpetual method. So you know nperpetual we keep up you keep track of the inventory at all times. Okay we just nsold we just sold a widget are we keeping track of inventory with this no nbecause on our books.
We still have a widget for five hundred dollars. So we nneed to get rid of this if we re going to perpetual and keeping track of the ninventory as we re going we need to get rid of this inventory. So that s going to nbe our credit. Because inventory is an asset.
We re lowering the amount of ninventory because we ve sold it so we re lowering inventory if inventory is a ndebit in the positive going up it s going to be a credit going down. So nthat s why our credit is over here inventory credit of five hundred dollars nthat is in our that is our expense in our perpetual system and that is going nto be our debit because that s how much the inventory cost us yoyoyo ni just lost my train of thought on cost of goods sold they re back at a few nhours later. I think i just want to say the cost of goods sold is the expense nit s the debit..
When you have a credit of inventory. When in your journal entry nwhen you re doing perpetual and you want to keep up with everything i think just nfor. Now you re going to have to know that and if you had if you re if you re ntaking. The inventory off the books you know as a transaction to happen like in na perpetual system then is a corresponding debit to that is ngoing to be a cost of goods sold and as its as it sounds.
It s the cost of the ngoods. Sold you guys you guys think that keeps everything this is the journal nentry for the perpetual. If we sold. One you see you have two journal entries.
Nbecause you re keeping up with it. Now you have the cost of goods sold nyou ve got the inventory now if you had if you had a periodic. If you re doing a nperiodic you re just going to do it certain you re just going to keep track nat. Certain times of the inventory.
This is just going to be your journal entry nfor when you sold you re going to have you know hey i got a thousand dollars ncash that s my debit i sold it for i what do you do i sold a wigner four nthousand dollars. So you can keep track like that and then at the right at the nend of the year. You re going to back that thing up back that thing up like nyou re playing the juvie or it s like the political plug call me nthe socket on the plugs plug anyways they call it a plug and that s what just nyou re going to have you have beginning inventory. Plus purchases equals navailable for sales minus units sold equals your every ending inventory so nthis is kind of the plug that you would do for periodic inventory.
Thank you very nmuch for watching if you made it this far you must have liked it at some nregard. Please give it a like please give this video. A like it really helps to nspread these videos out to a wider audience and who doesn t need to know naccounting. This is so much fun am.
I right noh leave a comment to subscribe if you don t we just hit 20k. I m going for 100k nit s tuesday today this is going to be ” ..
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