.What is the major difference between a periodic and perpetual inventory system?
Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the month.
Under the periodic inventory system, the purchase of inventory will be debited to the Purchases account.
Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory.
All of the answers are correct.
.What is the major difference between a periodic and perpetual inventory system?
Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the month.
Under the periodic inventory system, the purchase of inventory will be debited to the Purchases account.
Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory.
All of the answers are correct.
Related questions
Ferris Company began 2018 with 4,000 units of its principal product. The cost of each unit is $7. Merchandise transactions for the month of January 2018 are as follows:
| Purchases | |||||||||
| Date of Purchase | Units | Unit Cost* | Total Cost | ||||||
| Jan. 10 | 3,000 | $ | 8 | $ | 24,000 | ||||
| Jan. 18 | 4,000 | 9 | 36,000 | ||||||
| Totals | 7,000 | 60,000 | |||||||
*Includes purchase price and cost of freight.
| Sales | ||
| Date of Sale | Units | |
| Jan. 5 | 2,000 | |
| Jan. 12 | 1,000 | |
| Jan. 20 | 3,000 | |
| Total | 6,000 | |
5,000 units were on hand at the end of the month.
Required:
Calculate January's ending inventory and cost of goods sold for the month using each of the following alternatives:
1. FIFO, periodic system.
2. LIFO, periodic system.
3. LIFO, perpetual system.
4. Average cost, periodic system.
5. Average cost, perpetual system.
Periodic Inventory by Three Methods
The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, are as follows:
| Date | Transaction | Number of Units | Per Unit | Total | ||||
|---|---|---|---|---|---|---|---|---|
| Jan. 1 | Inventory | 7,500 | $75.00 | $562,500 | ||||
| 10 | Purchase | 22,500 | 85.00 | 1,912,500 | ||||
| 28 | Sale | 11,250 | 150.00 | 1,687,500 | ||||
| 30 | Sale | 3,750 | 150.00 | 562,500 | ||||
| Feb. 5 | Sale | 1,500 | 150.00 | 225,000 | ||||
| 10 | Purchase | 54,000 | 87.50 | 4,725,000 | ||||
| 16 | Sale | 27,000 | 160.00 | 4,320,000 | ||||
| 28 | Sale | 25,500 | 160.00 | 4,080,000 | ||||
| Mar. 5 | Purchase | 45,000 | 89.50 | 4,027,500 | ||||
| 14 | Sale | 30,000 | 160.00 | 4,800,000 | ||||
| 25 | Purchase | 7,500 | 90.00 | 675,000 | ||||
| 30 | Sale | 26,250 | 160.00 | 4,200,000 | ||||
Required:
1. Determine the inventory on March 31 and the cost of merchandise sold for the three-month period, using the first-in, first-out method and the periodic inventory system.
| Merchandise inventory, March 31 | $ |
| Cost of merchandise sold | $ |
2. Determine the inventory on March 31 and the cost of merchandise sold for the three-month period, using the last-in, first-out method and the periodic inventory system.
| Merchandise inventory, March 31 | $ |
| Cost of merchandise sold | $ |
3. Determine the inventory on March 31 and the cost of merchandise sold for the three month period, using the weighted average cost method and the periodic inventory system. Round the weighted average unit cost to the nearest cent and final answers to the nearest dollar.
| Merchandise inventory, March 31 | $ |
| Cost of merchandise sold | $ |
4. Compare the gross profit and the March 31 inventories, using the following column headings. Enter all amounts as positive numbers.
| FIFO | LIFO | Weighted Average | |
|---|---|---|---|
| Sales | $ | $ | $ |
| Cost of merchandise sold | |||
| Gross profit | $ | $ | $ |
| Inventory, March 31 | $ | $ | $ |
