OBJ. 1 EX 7-1 Control of inventories Triple Creek Hardware Store currently uses a periodic inventory system. Kevin Carlton, the owner, is considering the purchase of a computer system that would make it feasible to switch to a perpetual inventory system. Kevin is unhappy with the periodic inventory system because it does not provide timely information on inventory levels. Kevin has noticed on several occasions that the store runs out of good-selling items, while too many poor-selling items are on hand. Kevin is also concerned about lost sales while a physical inventory is being taken. Triple Creek Hardware currently takes a physical inventory twice a year. To minimize distractions, the store is closed on the day inventory is taken. Kevin believes that closing the store is the only way to get an accurate inventory count. Will switching to a perpetual inventory system strengthen Triple Creek Hard- ware's control over inventory items? Will switching to a perpetual inventory system elimi- nate the need for a physical inventory count? Explain.

OBJ. 1 EX 7-1 Control of inventories Triple Creek Hardware Store currently uses a periodic inventory system. Kevin Carlton, the owner, is considering the purchase of a computer system that would make it feasible to switch to a perpetual inventory system. Kevin is unhappy with the periodic inventory system because it does not provide timely information on inventory levels. Kevin has noticed on several occasions that the store runs out of good-selling items, while too many poor-selling items are on hand. Kevin is also concerned about lost sales while a physical inventory is being taken. Triple Creek Hardware currently takes a physical inventory twice a year. To minimize distractions, the store is closed on the day inventory is taken. Kevin believes that closing the store is the only way to get an accurate inventory count. Will switching to a perpetual inventory system strengthen Triple Creek Hard- ware's control over inventory items? Will switching to a perpetual inventory system elimi- nate the need for a physical inventory count? Explain.

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Description: rcisesOBJ. 1EX 7-1 Control of inventoriesot odt o Triple Creek Hardware Store currently uses a periodic inventory system. Kevin Carlton, thea ni nwodeowner, is considering the purchase of a computer system that would make it feasible toswitch to a p

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 3E: Perpetual versus Periodic Inventory Systems Graham Company is trying to select an inventory system....

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Question #1: Triple Creek Hardware Store currently uses a periodic inventory system. Kevin Carlton, the owner, is considering the purchase of a computer system that would make it feasible to switch to a perpetual inventory system. Kevin is unhappy with the periodic inventory system because it does not provide timely information on inventory levels. Kevin has noticed on several occasions that the store runs out of good-selling items, while too many poor-selling items are on hand. Kevin is also concerned about lost sales while a physical inventory is being taken. Triple Creek Hardware currently takes a physical inventory twice a year. To minimize distractions, the store is closed on the day inventory is taken. Kevin believes that closing the store is the only way to get an accurate inventory count. a. Will switching to a perpetual inventory system strengthen Triple Creek Hardware's control over inventory items? Yes or no? b. Will switching to a perpetual inventory system eliminate the…
Triple Creek Hardware Store currently uses a periodic inventory system. Kevin Carlton, the owner, is considering the purchase of a computer system that would make it feasible to switch to a perpetual inventory system.Kevin is unhappy with the periodic inventory system because it does not provide timely information on inventory levels. Kevin has noticed on several occasions that the store runs out of good-selling items, while too many poor-selling items are on hand.Kevin is also concerned about lost sales while a physical inventory is being taken. Triple Creek Hardware currently takes a physical inventory twice a year. To minimize distractions, the store is closed on the day inventory is taken. Kevin believes that closing the store is the only way to get an accurate inventory count. Will switching to a perpetual inventory system strengthen Triple Creek Hardware’s control over inventory items? Will switching to a perpetual inventory system eliminate the need for a physical inventory…
Items Included in Inventory The following are several items that Golosow Companys controller has questioned regarding their inclusion in inventory: a. An invoice has been received for goods ordered. The goods were shipped FOB destination but have not been received. b. Purchases have been ordered and received (shipping terms were FOB destination), but no invoice has arrived. c. Product was shipped to a customer today, FOB destination, and the invoice mailed. d. Purchases are in the receiving department, but they are damaged and will be returned. e. Product is in the shipping department, and the invoice has not been mailed to the customer. Shipping terms are FOB shipping point. f. Golosow has inventory in its possession from Tate Company. The inventory is to be sold by Golosow under a consignment arrangement with Tate. Required: 1. For each of the preceding items, indicate whether Golosow should include them in inventory. Justify your answer. 2. Next Level Describe the basic criterion for including items in inventory.
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Problem 1. - Expenditure Cycle Walker Books, Inc. (Manual System withMinimal PC Support) Purchases System The purchases process begins with the purchasing agent, who monitors the levels of books available via a computer terminal listing current inventory. Upon noticing deficiencies in inventory levels, the agent manually generates four hard copies of a purchase order: one is sent to accounts payable, one is sent to the vendor, one is sent to the receiving department, and the last is filed within the department. Vendors will generally ship the products within five business days of the order. When goods arrive in the receiving department, the corresponding packing slip always accompanies them. The receiving department clerk unloads the goods and then reconciles the packing slip with the purchase order. After unloading the goods, the clerk manually prepares three hard copies of the receiving report. One copy goes with the goods to the warehouse, another is sent to the purchasing…
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Tom Pryor is conducting an audit of the computerized inventory system used by Zix Corporation. Tom has inserted hypothetical data into the computer program that tracks inventory on a perpetual basis. Below are the hypotheical data inserted by Tom: Transaction Beginning inventory Purchase, day 1 Sale, day 2 Purchase, day 3. Sale, day 4 Units 10 5 669 Cost per unit $10 $11 $12 The computer program returned the following ending inventory values: FIFO perpetual, $96 LIFO perpetual, $80 Moving average, $88 Which of the three values appears to be incorrect, and what "error" might be causing this condition?
This question is from Accounting Information System 9th edition, James A. Hall Chap. 2, Problem 12P (the solution of the coursebook is available on bartleby, but unfortunately I cannot access) System Documentation The following describes the expenditure cycle procedures. The inventory control clerk examines the inventory records for items that must be replenished and prepares a two-part purchase requisition. Copy 1 of the requisition is sent to the purchasing department and Copy 2 is filed. Upon receipt of the requisition, the purchase clerk selects a supplier from the valid vendor journal (reference file) and prepares a three-part purchase order. Copy 1 is sent to the supplier, Copy 2 is sent to the accounts payable department where it is filed temporarily, and Copy 3 is filed in the purchasing department. A few days after the supplier ships the order, the goods arrive at the receiving department. They are inspected and the receiving clerk prepares a three-part receiving report…
Knowledge Check 01 A buyer uses a perpetual inventory system, and on December 7, it contacts its supplier to report that some of the merchandise purchased on December 5 was defective. The seller offered to reduce the merchandise price by $400. The buyer agreed to keep the defective merchandise under those terms. Complete the buyer's necessary journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns. View transaction list Journal entry worksheet
Question 1 and 2 1. ABC Enterprise is a grocery store that sells high volume but relatively low-priced items. The entity has a computerized system (point-of-sale scanner) to account efficiently all items sold. The accountant decided to use the periodic inventory system because the entity sells high volume and low-priced items, anyway at the end of the period a physical count of goods has to be made to establish the unsold items (merchandise inventory end). Do you agree with the accountant? If Yes why, if No support your answer. 2. On April 5, 2020 Company A sell merchandise to Company L for P50,000 under the terms: 2/10, n/30 FOB Shipping point freight prepaid. Company A being the shipper paid the freight amounting to P2,000. On April 12, Company L paid in full the account amounting to P50,960. Company A notify Company L that the amount to be paid is not P50,960 but P51,000. Whose claim do you think is correct A or L? Explain
Case analysis 2 FTW corporation sells computer peripherals and related devices, such as printers, ink, flash drives and cables. FTW has a staff of three purchasing agents, each of whom oversees a specific set of inventory items. Each purchasing agent uses his/her discretion in making decisions about when to order inventory, how much inventory to order, and which vendor to purchase from. When ordered inventory arrives at FTW, one of two receiving clerks matches the items, quantities, and vendors against a copy of the purchase order, then either stocks the merchandise on the shelves or puts it in the storeroom. FTW's accountant receives a copy of the invoice from the vendor, as well as an e-mail from one of the receiving clerks indicating that merchandise has been received. The e-mail also includes the relevant purchase order number. The accountant files the invoice by date in a filing cabinet; once a week, the accountant removes invoices from the filing cabinet and pats them by…