Perpetual Inventory System Journal Entries

The perpetual inventory system journal entries below act as a quick reference, and set out the most commonly encountered situations when dealing with the double entry posting under a perpetual inventory system.

In each case the perpetual inventory system journal entries show the debit and credit account together with a brief narrative. For a fuller explanation of journal entries, view our examples section.

Typical Perpetual Inventory System Journal Entries


To purchase goods from a supplier using perpetual inventory system journal entries
Account Debit Credit
Inventory XXX
Accounts payable XXX

To record a supplier purchase discount
Account Debit Credit
Inventory XXX
Accounts payable XXX

To record freight costs
Account Debit Credit
Inventory XXX
Accounts payable XXX

To record a purchase return to a supplier using perpetual inventory system journal entries
Account Debit Credit
Accounts payable XXX
Inventory XXX

To record the sale of goods to a customer using perpetual inventory system journal entries
Account Debit Credit
Cost of goods sold XXX
Inventory XXX
Sales XXX
Accounts receivable XXX

To record a sales return from a customer using perpetual inventory system journal entries
Account Debit Credit
Inventory XXX
Cost of goods sold XXX
Sales returns XXX
Accounts receivable XXX

To record a physical inventory count shortage
Account Debit Credit
Loss on inventory write down XXX
Inventory XXX

To record inventory received not invoiced by supplier
Account Debit Credit
Inventory XXX
Inventory received not invoiced XXX

*It should be noted that for a perpetual inventory system, there is no end of period bookkeeping entry.

Perpetual vs Periodic Inventory System Journal Entries

This reference guide is for the perpetual inventory system, if the business is using a periodic inventory system the journal entries are different and can be seen in our periodic inventory system journal entries reference guide.

perpetual v periodic v 1.0
Perpetual vs Periodic Inventory System Journal Entries

The perpetual vs periodic inventory system journal entries diagram used in this tutorial is available for download in PDF format by following the link below.

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