Exam 15: Accounting for Merchandise Inventory

A customer returned merchandise that had been paid for within a discount period for credit.The entry was recorded with a debit to Sales Returns and Allowances and a credit to Accounts Receivable for the net amount.This error would cause:

The gross profit method can be used to estimate the amount of inventory destroyed by fire.

Use four decimal places.Chocolate Heaven had the following data for November: Cost Price Retail Price Beginning inventory \ 8,000 \ 13,000 Purchases 18,000 25,000 Sales 30,000 The cost of the estimated inventory on November 30 under the retail method is:

Which of the following should NOT be included in inventory costs?

The company returned $400 of damaged merchandise purchased on credit.The entry to record this under the periodic inventory method is:

The journal entry to record the purchase of inventory under the perpetual system includes:

The inventory method that assumes the cost of the ending inventory consists of old inventory is:

A company should use the specific invoice method to value items such as automobiles for retail sale.

In assigning a cost to ending inventory,the cost flow does not have to follow the physical flow.

Goods on consignment to another company:

As a result of overstating ending inventory by $10,000 at the end of Year 1:

Barry's Books uses a periodic inventory system.Barry's Books sold 40 copies of Helpful Hints during September.Other data for September include: Sep. 1 Balance 10 books @\ 20 8 Purchased 15 books @\ 21 17 Purchased 20 books @\ 22 25 Purchased 20 books @\ 24 Cost of goods sold under the FIFO method is:

An inventory ledger is used to track details of quantities and costs.

Assume that in Year 1,the ending merchandise inventory is overstated by $30,000.If this is the only error in Years 1 and 2,fill in the items below,indicating which items will be understated(U),overstated(O),or correctly(C)stated for Year 2. Ending merchandise inventory Year 2 \_\_\_ Beginning merchand ise inventory Year 2\_\_\_ Cost of goods sold Year 2 \_\_\_ Gross profit Year 2 \_\_\_ Net income Year 2 \_\_\_ Ending owner's capital Year 2 \_\_\_

Under the perpetual inventory system,which of the following accounts would NOT be used?

Under the periodic inventory system,in addition to making the entry to record a sale,a company would:

Calculate the cost of goods sold under each of the following methods given the information below about purchases and sales during the year.Assume a periodic inventory system.Use four decimal places. April 1 Beginning inventory 60 units @\ 30 11 Purchases 80 units @ \ 32 21 Purchases 30 units @ \ 35 Sales for April: 115 units a)________ FIFO b)________ LIFO c)________ Weighted-average

Items that are very similar,such as canned goods in a grocery store would be costed using the ________ system of inventory valuation.

Shayla's Design uses a periodic inventory system.Shayla sold 33 artist kits during January.Other data for January includes: Jan, 1 Balance 12 kits @\ 30 11 Purchased 20 kits @\ 33 25 Purchased 26 kits @\ 38 Ending Inventory under the FIFO method is:

Prepare journal entries for the following transactions for Jane's Violin Shop applying the perpetual inventory system.Omit explanations.