Merchandising accounting,how the purchases account (for merchandising operations) is used in the periodic inventory system (periodic inventory method), purchases account is included in net income on the income statement, example details the accounting entries for purchasing transactions, the purchases account and the (contra accounts) purchase discounts and purchase returns and allowances, the example details the periodic inventory system for end of period (year) adjustments to the purchases account, (1) end of period purchase discounts and purchase returns and allowances are closed to purchases account, (2) end of period the purchases account(less returns & discounts) is closed to COGS (cost of goods sold) for the amount of purchases sold, (3) the purchases account is adjusted (purchases net amount - purchases sold = purchases remaining after sales), the purchases remaning gets closed to the inventory account (asset) on the balance sheet which closes out the purchases account such that it starts with a zero balance for the next period (year), in summary purchases account gets closed at end of period, (1) amount sold closed to COGS and (2) amount remaining closed to inventory account on balance sheet, detailed accounting showing transactions on a balance sheet template with (T Accounts) by Allen Mursau

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