Explanation:
The journal entries are as follows
On October 7
Under periodic inventory
Account receivable $1,200
To Sales revenue $1,200
(Being the sales revenue on credit basis is recorded)
Under perpetual inventory
Accounts receivable A/c Dr $1,200
To Sales revenue A/c $1,200
(Being the sales revenue on credit basis is recorded)
Cost of goods sold A/c Dr $720
To Merchandise inventory A/c $720
(Being the merchandise is sold at cost)
On October 8
Under periodic inventory
Purchase $10,000
Freight in $525
To Account payable $10,525
(Being the purchase made on credit is recorded)
Under perpetual inventory
Merchandise inventory $10,525
To Account payable $10,525
(Being the purchase made on credit is recorded)
