In a periodic system, purchasing activities are kept in accounts separate from the main Inventory account.

Concept #1: Periodic Inventory: Purchases

Concept #2: Periodic Inventory: Purchase Returns

Concept #3: Periodic Inventory: Purchase Allowance

Practice: Never Satisfied Incorporated (NSI) purchased 400 units of High Quality Goods for $300,000 on account. After inspecting the goods, they decided that 300 units did not meet their standards and NSI received a refund for these goods. If NSI uses a periodic inventory system, the entry to record the return of goods would include: