Exam 15: Accounting for Merchandise Inventory

The following transactions took place during August of the current year for Roadhouse School Supplies. August 6 Purchased merchandise on account from Abe's Papermill for $10,000. August 8 Paid freight charges of $600 on merchandise purchased on the 6th. August 12 Sold merchandise on account to Johnson Elementary for $2,500. The cost of the merchandise was $500. August 17 Received a credit memo from Abe's Papermill for merchandise returned, $1,000 August 21 Issued a credit memo to Johnson Elementary for merchandise returned, $400. The cost of the merchandise is $150. Journalize the above transactions using the periodic inventory system.

Mack Industries uses the perpetual inventory system. What is the entry to record a $450 merchandise purchase on account from Nickel Corporation?

The ending inventory for this year is overstated. This error would cause:

The journal entry to record the return of a purchase of inventory under the periodic system includes a:

Joe owns an auto parts store called Joe's Auto Care. The following transactions took place during July of the current year. July 8 Purchased merchandise on account from Wheeler Auto for $6,000 July 10 Paid freight charges of $400 on merchandise purchases on the 8th. July 12 Sold merchandise on account to Lancaster Auto Sales for $5,500. The cost of the merchandise was $3,500 July 16 Received a credit memo from Wheeler for merchandise returned, $900 July 22 Issued a credit memo to Lancaster Auto Sales for merchandise returned, $1,000. The cost of the merchandise is $550. Journalize the above transactions using the perpetual inventory system.

The principle of consistency states that:

An incorrect calculation of ending inventory affects:

Indicate the account(s) to be debited and credited to record the following transactions. -Customer returned goods purchased on credit - Perpetual Debit ________ & ________ Credit ________ & ________

Which of the following should be included in inventory costs?

The perpetual inventory system is a system which:

Under the ________ inventory system, cost of goods sold and the amount of merchandise inventory on hand are updated at the end of the accounting period.

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. Sales for March: 95 units a) ________ FIFO b) ________ LIFO c) ________ Weighted-average

Indicate the account(s) to be debited and credited to record the following transactions. -Paid for freight charges. - Perpetual Debit ________ Credit ________

An advantage of the FIFO method is that:

The company returned $500 of damaged merchandise purchased on credit. The entry to record this under the periodic inventory system is:

Sterling Supply uses a periodic inventory system. Sterling Supply sold 35 globes during March. Other data for March include: Round per unit cost to two decimal places. Ending inventory under the weighted-average method is:

Calculate the ending inventory under each of the following methods given the information below about purchases and sales during the year. Assume a periodic inventory system. Round to four decimal places. Sales for April: 115 units a) ________ FIFO b) ________ LIFO c) ________ Weighted-average

Under the specific invoice method, costs are matched with individual sale items.

Barry's Books uses a periodic inventory system. Barry's Books sold 40 copies of Helpful Hints during September. Other data for September include: Ending inventory under the FIFO method is:

American Lumber has the following company information for October: goods available for sale at cost are $24,000, retail is $36,500, and sales at retail equal $28,500. Bert has a normal gross profit of 20%. The cost of estimated ending inventory under the retail method is: (Round any percentages to two decimal places, X.XX%, and your final answer to the nearest dollar.)