Exam 6: Cost of Goods Sold and Inventory

Which of the following statements is false?

Determine the amount of inventory on the balance sheet of a manufacturing company from the following account balances:

The inventory account a manufacturer uses to record the cost of products completed and available for sale is called

Cost of goods sold is equal to beginning inventory plus the net cost of purchases minus _____.

How are purchase returns and purchase discounts recorded by a company using the periodic inventory system?

Selected account balances are listed below: -Refer to the information provided for Aaron Corporation. Calculate gross margin.

Under a periodic inventory system, shipping costs are not charged to the inventory asset account. Instead, such costs are charged to the ____________________ account.

Bihary Company has a beginning balance in its inventory account of $2,250 and the ending balance is $1,500. Cost of goods sold is $9,750. According to the cost of goods sold model, what was the amount of inventory purchased during the year?

Yancey Company The following information is available for Yancey Company, a retail store, for the year 2013. The company uses a periodic inventory system. Beginning inventory was $32,000. During the year, Yancey Company purchased goods totaling $634,000 on account with terms of 2/10, n/30, FOB shipping point. Yancey Company paid $1,000 in total freight charges directly to the freight company. At the end of the year, inventory on hand totaled $45,000. Net sales reported on the income statement for the year totaled $1,300,000. -Refer to the information presented for White Appliances. On August 12th, White sold 10 dishwashers to customers for $550 each. White paid $200 each for these dishwashers when it purchased them from the supplier on August 1st. On August 15th, customers returned 2 of these dishwashers for a cash refund.Record the journal entries for this sale and sales return.

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. (Choices may be used more than once.) a.Add to inventory cost c.Not an inventory cost b.Subtract from inventory cost -Paid for purchased goods within the discount period.

Touchton Company reported the following financial results for 2012 and 2013: Provide the answer for each missing letter above.

What effects on a retail store's accounting equation occur when merchandise returned by customers is recorded?

Serrano Company On September 1, 2013, Serrano Company purchased 70 units of Product A for $35,000 cash and also paid $1,500 transportation costs related to this purchase. On the same date, Serrano Company purchased 100 units of Product B for $10,000 on credit; however, the seller paid the $1,200 freight. The credit terms for Product B were 2/10, n/30. On September 3rd, Serrano Company determined that 5 units of Product A were defective, so they were returned to the seller. Serrano Company paid for its purchase of Product B on September 9th. On September 10th, Serrano Company purchased 90 units of Product C for $8,000 on credit with terms 1/10, n/30. The seller paid the freight. Serrano Company paid for its purchase of Product C on September 21st. -Refer to the information presented for Serrano Company. Prepare all of Serrano Company's journal entries for September assuming the company uses a periodic inventory system.

Serrano Company On September 1, 2013, Serrano Company purchased 70 units of Product A for $35,000 cash and also paid $1,500 transportation costs related to this purchase. On the same date, Serrano Company purchased 100 units of Product B for $10,000 on credit; however, the seller paid the $1,200 freight. The credit terms for Product B were 2/10, n/30. On September 3rd, Serrano Company determined that 5 units of Product A were defective, so they were returned to the seller. Serrano Company paid for its purchase of Product B on September 9th. On September 10th, Serrano Company purchased 90 units of Product C for $8,000 on credit with terms 1/10, n/30. The seller paid the freight. Serrano Company paid for its purchase of Product C on September 21st. -Refer to the information presented for Serrano Company. On September 12th, Serrano Company sold 10 units of Product B to customers for $180 each. Serrano Company had paid $100 for each unit of Product B when it purchased them from the supplier on September 1st. On September 15th, customers returned 2 units of Product B for a cash refund.Record the journal entries for this sale and sales return assuming the company uses a periodic inventory system.

When the shipping terms are FOB destination, the buyer must record transportation costs as an additional cost of acquiring the inventory under the perpetual inventory system.

Match the terms with the descriptions provided. a.Consignment f.Purchase allowance b.Discount period g.Purchase discounts c.Inventory h.Purchase returns d.LIFO Reserve i.Purchases e.Lower of cost or market rule -Under the perpetual inventory system, a reduction in the inventory account balance not caused by a sale or return.

Eli Company Eli Company sells novelty items and offers terms of 1/10, n/30 to credit customers. One customer, Faulkner, Inc., purchased 100 Sweet-16 party decor packs with a list price of $20 each on March 5, 2013. -Refer to the information provided for Eli Company. If the customer pays the invoice on March 31, 2013, how much sales discount will Eli Company recognize?

Describe how the inventories of manufacturers differ from the inventories of retailers.

Serrano Company On September 1, 2013, Serrano Company purchased 70 units of Product A for $35,000 cash and also paid $1,500 transportation costs related to this purchase. On the same date, Serrano Company purchased 100 units of Product B for $10,000 on credit; however, the seller paid the $1,200 freight. The credit terms for Product B were 2/10, n/30. On September 3rd, Serrano Company determined that 5 units of Product A were defective, so they were returned to the seller. Serrano Company paid for its purchase of Product B on September 9th. On September 10th, Serrano Company purchased 90 units of Product C for $8,000 on credit with terms 1/10, n/30. The seller paid the freight. Serrano Company paid for its purchase of Product C on September 21st. -Refer to the information provided for Jocque Fabrics. If the company uses the FIFO method, determine the following amounts: A)Ending inventory on February 28th? B)Cost of Goods sold for the month of February? C)Gross Margin for February?

Ward Company had beginning inventory of $40,000 on January 1, 2013. During 2013, the company purchased $660,000 of goods from a supplier. On December 31, 2013, the cost of unsold inventory was $50,000. Compute Ward Company's cost of goods available for sale and cost of goods sold for 2013.