Farthington Soccer Supplies purchases merchandise from a supplier on credit, terms 1/10, n/30 for $16,300. Assume the company uses a perpetual inventory system, and records purchases using the gross method. When recording the purchase transaction in its purchases journal, Farthington would enter:

When recording the purchase transaction in its purchases journal, Farthington would enter:  $16,300 in the Accounts Payable Cr. column and $16,300 in the Inventory Dr. column.

Explanation:

A perpetual inventory system is an efficient way of recording transactions than the periodic inventory system.

The real time transactions of sold or received stock are recorded with the help of perpetual inventory system.

In the above scenario, Farthington Soccer Supplies purchases some merchandises on credit from the supplier. Farthington can enter their transaction in its purchases journal in the following way: $16,300 in the Accounts Payable Cr. column and $16,300 in the Inventory Dr. column.