Alpha company is a trading company that purchases and sales fruits and vegetables. During the year 2020, the company shows the following transactions and events: 7) Net profit is computed by subtracting operating expenses from the cost of goods sold. 8) The accountant records merchandise inventory (stock) in the expenses section of the income statement. 9) The company assumes that physical inventory is not important as it uses the perpetual inventory system during the year.
Alpha company is a trading company that purchases and sales fruits and vegetables. During the year 2020, the company shows the following transactions and events: 7) Net profit is computed by subtracting operating expenses from the cost of goods sold. 8) The accountant records merchandise inventory (stock) in the expenses section of the income statement. 9) The company assumes that physical inventory is not important as it uses the perpetual inventory system during the year.
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter6: Accounting For Merchandising Businesses
Section: Chapter Questions
Problem 9PB: On June 30, 2019, the balances of the accounts appearing in the ledger of Simkins Company are as...
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Alpha company is a trading company that purchases and sales fruits and vegetables. During the year 2020, the company shows the following transactions and events:
7) Net profit is computed by subtracting operating expenses from the cost of goods sold.
8) The accountant records merchandise inventory (stock) in the expenses section of the income statement.
9) The company assumes that physical inventory is not important as it uses the perpetual inventory system during the year.
10) The driver of the company has access to the inventory, he delivers the merchandise, receives the cash and has access to the company books.
Required:
For each case, identify the anomaly and propose the correct accounting treatment/answer:
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