You may have shopped at a Billy’s store. Suppose Billy’s purchased

Price: $1.99


S5-1 Comparing periodic and perpetual inventory systems [10 min]
You may have shopped at a Billy’s store. Suppose Billy’s purchased T-shirts on
January 1 on account for $15,900. Credit terms are 2/15, n/30. Billy’s paid within
the discount period on January 8. Billy’s sold the goods on February 5.

Requirements

1. If Billy’s uses a periodic inventory system, in which month will the purchase of
inventory be recorded as an expense? How much will the net expense be?

2. If Billy’s uses the perpetual inventory system, in which month will the purchase
of inventory be recorded as an expense? How much will the net expense be