Bingerton Industries uses a perpetual inventory system. The company began the year with inventory of $78,000. Purchases of inventory on account during the year totaled $303,000. Inventory costing $328,000 was sold on account for $506,000. Required: Record transactions for the purchase and sale of inventory. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

For the purchase;

Debit Inventory account $303,000

Credit Accounts Payable $303,000

Being entries to record the purchase of inventory on accounts

For the sale,

Debit Cash/Accounts receivable $506,000

Credit Revenue $506,000

Being entries to record the sale of inventory

For the reduction in inventory

Debit Cost of sales $328,000

Credit Inventory $328,000

Being entries to record cost of goods sold.

Explanation:

Materials may either be purchased on credit or by cash, When materials are purchased on credit, such materials are said to have been purchased on accounts.

The entries for purchases on account are;

Debit Supplies/Inventory account

Credit Accounts Payable

When inventory items are sold, the effect is dual as it results in the recognition of sales and a reduction in inventory.

For the sale,

Debit Cash/Accounts receivable

Credit Revenue

For the reduction in inventory

Debit Cost of sales

Credit Inventory