Exam 15: Accounting for Merchandise Inventory

Given the following accounts: [1] Cash [2] Accounts receivable [3] Merchandise inventory [4] Supplies [5] Accounts payable [6] Sales [7] Sales returns and allowances [8] Sales discounts [9] Cost of goods sold [10] Purchases [11] Purchase returns and allowances [12] Purchase discounts [13] Freight-in Indicate the account(s) to be debited and credited to record the following transactions. -Paid for merchandise within the discount period.- Perpetual Debit ________ & ________ Credit ________ & ________

St.Paul Corporation has a normal gross profit of 45%.The current year's beginning inventory was $2,500,purchases were $9,000,and retail sales were $15,000.The estimated ending inventory under the gross profit method is:

The inventory method where the ending inventory consists of current costs is:

Chewy Candy has a beginning inventory of $1,000.June purchases were $3,000,and retail sales were $5,000.The store has a normal gross profit of 50%.What is the June 30 estimated ending inventory at cost under the gross profit method?

The freight paid on goods purchased F.O.B.shipping point was debited to the Purchases account.This error would cause:

Tracking individual inventory items is tracked in the:

Joe owns an auto parts store called Joe's Auto Care.The following transactions took place during November of the current year. $\text {November 7}$ $\quad$$\text { Purchased merchandise on account from Wheeler Auto for \$ 4,300.}$ $\text {November 9}$ $\quad$$\text {Paid freight charges of \$ 230 on merchandise purchased on the 7 th.}$ $\text {November 11}$ $\quad$$\text { Sold merchandise on account to Lancaster Auto Sales for \$ 3,500. The cost of the merchandise was \(\$ 2,500\).}$ $\text {November 13}$ $\quad$$\text {Received a credit memo from Wheeler for merchandise returned, \$ 670.}$ $\text {November 20}$ $\quad$$\text { Issued a credit memo to Lancaster Auto Sales for merchandise returned, \$ 820. The cost of the merchandise is \(\$ 550\).}$ Journalize the above transactions using the periodic inventory system.

A beginning inventory and purchases of computer parts follow: Beginning inventory 6@\ 12 First purchase 15@11 Second purchase 10@14 Required: Determine the cost of an ending inventory of 6 computer parts remaining in the periodic inventory under each of the assumptions listed. a)________ FIFO b)________ LIFO c)________ Weighted-average

Office Supplies bought on account were returned for credit and recorded with a debit to Accounts Payable and a credit to Merchandise Inventory.This error would cause:

Inventory purchases are entered in the Merchandise Inventory account at the expected sales price amount.

In a perpetual inventory system,Cost of Goods Sold is an account in the general ledger.

Barry's Books uses a periodic inventory system.Barry's Books sold 45 copies of Helpful Hints during September.Other data for September include: Sep. 1 Balance 12 books @\ 20 8 Purchased 10 books @\ 21 17 Purrchased 30 books @\ 22 25 Purrchased 15 books @\ 24 Ending inventory under the FIFO method is:

Hawkeye Tack uses a periodic inventory system.Hawkeye Tack sold 80 sweaters during September.Other data for September includes: Sep. 1 Balance 40@\ 25 8 Purchased 12@28 17 Purrchased 25@30 25 Purrchased 35@32 Cost of goods sold under the FIFO method is:

Sterling Supply uses a periodic inventory system.Magnum sold 25 globes during March.Other data for March includes: Mar. 1 Balance 20@\ 12 11 Purchased 10@11 25 Purchased 10@10 Ending inventory under the weighted-average method is:

FIFO provides an up-to-date ending inventory on the balance sheet because it uses the latest purchases to calculate ending inventory.

The advantage of the weighted-average method is:

This inventory method produces the lowest income tax during a period of inflation.

Journalize the following assuming periodic inventory. $\text {July 20 }$ $\quad$$\text {Made purchases of inventory for \$ 3,500 on account}$ $\text { July 21 }$ $\quad$$\text {Made sales of \$ 2,300 cash and \( \$ 1,200 \) credit.}$ $\text {July 22}$ $\quad$$\text {Returned \$ 1,400 of purchases for defects.}$

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

When a perpetual inventory system is used,a physical inventory should be taken at least annually.