ACCT 115 Chapter 6: Accounting Chapter Six

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amberserval592

8 Mar 2016

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Accounting for merchandise inventories: perpetual inventory system sale, cost of goods sold, and inventory is always up-to-date, periodic inventory system. Ending balance of last period = beginning balance of new period. Beginning balance + purchases = cost of goods sold + ending balance. Inventory goods that are purchased for the purpose of resale to customers. Appears immediately below accounts receivable on the balance sheet. Control account a general ledger account that summarizes the content of a specific subsidiary ledger. Subsidiary ledger a ledger containing separate accounts for each of the items making up the balance of a control account in the general ledger. The total of the account balances in a subsidiary ledger are equal to the balance in the general ledger control account. As inventory is purchased, it is recorded as an asset in the balance sheet. As it is sold, this asset is converted to an expense (cost of goods sold)

Related Questions

Capes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:

Sales are budgeted at $260,000 for November, $270,000 for December, and $250,000 for January.

Collections are expected to be 60% in the month of sale and 40% in the month following the sale.

The cost of goods sold is 60% of sales.

The company desires an ending merchandise inventory equal to 40% of the cost of goods sold in the following month. Payment for merchandise is made in the month following the purchase.

The November beginning balance in the accounts receivable account is $61,000.

The November beginning balance in the accounts payable account is $248,000.

Required:

a. Prepare a Schedule of Expected Cash Collections for November and December.

b. Prepare a Merchandise Purchases Budget for November and December.

Prepare a Schedule of Expected Cash Collections for November and December.

	November	December
Sales
Schedule of Expected Cash Collections
Accounts receivable
November sales
December sales
Total cash collections

Prepare a Merchandise Purchases Budget for November and December.

Merchandise Purchases Budget	November	December
Cost of goods sold

Total needs

Required purchases

ochretoad993

12 ACCOUNTING QUESTIONS

4. Using a perpetual inventory system, the buyer'sjournal entry to record the return of merchandise purchased onaccount includes a:

Select one:

A. Credit to Cost of Goods Sold

B. Credit to Accounts Payable

C. Credit to Purchase Returns

D. Credit to Inventory

6.Using a perpetual inventory system, the buyerâsjournal entry to record the payment for merchandise within thediscount period includes a:

Select one:

A. Debit to Accounts Payable

B. Debit to Cost of Goods Sold

C. Debit to Purchases

D. Debit to Inventory

7.Which of the following statements regarding cost flows istrue?

Select one:

Cost of goods available for sale is equal to beginning inventoryminus cost of goods purchased.

CGAS = beginning inventory minus ending inventory.

Cost of goods available for sale is equal to beginning inventoryplus cost of goods purchased.

CGAS = cost of goods sold minus cost of goods purchased.

10. Using a perpetual inventory system, the buyerâsjournal entry to record the purchase of merchandise on creditincludes a:

Select one:

A. Debit to Inventory

B. Debit to Freight In

C. Debit to Cost of Goods Sold

D. Debit to Purchases

11. Which of the following is not shown in thestatement of stockholder's equity?

Select one:

A. Unearned revenue

B. Common stock

C. Retained earnings

D. Dividends

13. Using a perpetual inventory system, the sellerâsjournal entry to record the sale of merchandise on account includesa:

Select one:

A. Debit to Accounts Receivable

B. Credit to Cost of Goods Sold

C. Credit to Purchases

D. Debit to Inventory

14. A merchandising company's multi-step income statementdiffers from that of a service company in what way?

Select one:

A service company does not include a line for cost of goodssold.

A service company has a line for selling expenses whereas amerchandising company does not.

There is no difference.

A merchandising company will have a line for income fromoperations whereas a service company will not.

16.Using a perpetual inventory system, the sellerâs journalentry to record the return, by the buyer, of merchandise purchasedon account includes a:

Select one:

A. Credit to Purchase Returns

B. Debit to Cost of Goods Sold

C. Debit to Accounts Receivable

D. Debit to Sales and Allowances

20. For a firm that uses the perpetual inventory system, theSales Returns and Allowances account:

Select one:

A. Is not a contra account

B. Is not used

C. Is debited by the firm receiving returned goods from acustomer

D. Has a normal credit balance

21. Current assets are cash and other assets that will beconverted into cash or used up within:

Select one:

A. One year

B. The normal operating cycle of the business

C. The normal operating cycle of the business or one year,whichever is longer

D. The normal operating cycle of the business or one year,whichever is shorter

22. The balance sheet format that reports assets first and then,beneath the assets, reports the liabilities and stockholders'equity is called the:

Select one:

A. Account form

B. Report form

C. Stack form

D. Classified form

23. Safari Monkey Company sold $2,400,000 worth of merchandise,had $200,000 returned, and then the balance was received during the2% discount period.

What were the companyâs net sales?

Select one:

A. $1,800,000

B. $1,760,000

C. $2,156,000

D. $2,040,000

turquoisesea-lion93

Altira Corporation uses a periodic inventory system. Thefollowing information related to its merchandise inventory duringthe month of August 2018 is available:


Aug.1	Inventory on handâ2,000 units;cost $6.10 each.
8	Purchased 10,000 units for $5.50each.
14	Sold 8,000 units for $12.00each.
18	Purchased 6,000 units for $5.00each.
25	Sold 7,000 units for $11.00each.
31	Inventory on handâ3,000 units

Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using each of thefollowing cost flow methods.

FIFO

LIFO

Average Cost

Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using the FIFO method.(Round "Cost per Unit" to 2 decimal places.)

FIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic FIFO			Ending Inventory - Periodic FIFO
FIFO	# of units	Cost per unit	Cost of Goods Available for Sale	# of units sold	Cost perunit	Cost of Goods Sold	# of units in ending inventory	Cost per unit	Ending Inventory
BeginningInventory	2,000	$6.10	$12,200	2,000	$6.10	$12,200		$6.10	$0
Purchases:
August 8	10,000	$5.50	55,000	10,000	$5.50	55,000		$5.50	0
August 18	6,000	$5.00	30,000	3,000	$5.00	15,000		$5.00
Total	18,000		$97,200	15,000		$82,200	0		$0

Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using LIFO method.(Round "Cost per Unit" to 2 decimal places.)

LIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic LIFO			Ending Inventory - Periodic LIFO
LIFO	# ofunits	Cost perunit	Cost ofGoods Available for Sale	# of unitssold	Cost perunit	Cost ofGoods Sold	# of unitsin ending inventory	Cost perunit	EndingInventory
Beginning Inventory	2,000	$6.10	$12,200		$6.10	$0		$6.10
Purchases:
August 8					$0.00			$0.00
August 18					$0.00			$0.00	0
Total	2,000		$12,200	0		$0	0		$0

Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using Average costmethod. (Round "Average Cost per Unit" to 2 decimal places.)

AverageCost	Cost ofGoods Available for Sale			Cost ofGoods Sold - Average Cost			EndingInventory - Average Cost
AverageCost	# of units	Unit Cost	Cost of Goods Available for Sale	# of units sold	Average Cost per Unit	Cost of Goods Sold	# of units in ending inventory	Average Cost per unit	Ending Inventory
Beginning Inventory
Purchases:
August 8
August 18
Total	0		$0			$0			$0

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ACCT 115 Chapter 6: Accounting Chapter Six

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