Whispering Inc. is in the corn-milling industry but to date has had only enough manufacturing space for one joint process. Whispering refers to its two products as prime products and by-products. There is a market for both products, but, as the names imply, the prime products are what Whispering got into business to sell, as the prime products' sales price far exceeds that of the by-products. In a typical production run, which costs $59,000, Whispering Inc. produces the following products, which can be sold at the prices shown. Prime products By-products Quantity Produced (a) 1,500 tons 890 tons Sales Price per Ton $50 $5 Because Whispering's customers (the corn processors) count on purchasing top-quality raw material from Whispering, it is important that the company maintains a steady amount of inventory. For this reason, Whispering never completely sells out of its products. For the current production run, managers plan to sell 80% of each product immediately, holding 20% in inventory to carry into the next period. Record the journal entries to recognize the completion of the products through the sale of both products if the production IC-

Whispering Inc. is in the corn-milling industry but to date has had only enough manufacturing space for one joint process. Whispering refers to its two products as prime products and by-products. There is a market for both products, but, as the names imply, the prime products are what Whispering got into business to sell, as the prime products' sales price far exceeds that of the by-products. In a typical production run, which costs $59,000, Whispering Inc. produces the following products, which can be sold at the prices shown. Prime products By-products Quantity Produced (a) 1,500 tons 890 tons Sales Price per Ton $50 $5 Because Whispering's customers (the corn processors) count on purchasing top-quality raw material from Whispering, it is important that the company maintains a steady amount of inventory. For this reason, Whispering never completely sells out of its products. For the current production run, managers plan to sell 80% of each product immediately, holding 20% in inventory to carry into the next period. Record the journal entries to recognize the completion of the products through the sale of both products if the production IC-

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

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 5RE: Using the information provided in RE8-4, prepare the journal entry to record the write-down of...

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Which of the following describes features of a perpetual inventory system? A. Technology is normally used to record inventory changes. B. Merchandise bought is recorded as purchases. C. An adjusting journal entry is required at year end, to match physical counts to the asset account. D. Inventory is updated at the end of the period.
Prepare Journal entries to record the following transactions, assuming perpetual inventory updating, and last-in, first-out (LIFO) cost allocation. Assume no beginning inventory.
Using the information provided in RE8-4, prepare the journal entry to record the write-down of inventory for Paul Corporation assuming that it uses the allowance method instead of the direct method. Paul Corporation uses FIFO and reports the following inventory information: Assuming Paul uses a perpetual inventory system and the direct method, prepare the journal entry to record the write-down if inventory.
This type of inventory system does not require an entry to Merchandise Inventory until a physical inventory has been taken. a. Periodic inventory system b. Perpetual inventory system c. Merchandise inventory system d. Beginning inventory system e. Ending inventory system
Brown Inc. records purchases in a purchases journal and purchase returns in the general journal. Record the following transactions using a purchases journal, a general journal, and an accounts payable subsidiary ledger. The company uses the periodic method of accounting for inventory.
A retailer obtains a purchase allowance from the manufacturer in the amount of $600 for faulty inventory parts. Which of the following represents the journal entry for this transaction, assuming the retailer has already remitted payment? A. B. C.
Rules of debit and credit for periodic inventory accounts Complete the following table by indicating for A through G whether the proper answer is debit or credit:
Which type or types of inventory timing system (periodic or perpetual) requires the user to record two journal entries every time a sale is made. A. periodic B. perpetual C. both periodic and perpetual D. neither periodic nor perpetual
Perpetual and Periodic Inventory Systems Below is a list of inventory systems options. a. Perpetual inventory system b. Periodic inventory system c. Both perpetual and periodic inventory systems Required: Match each option with one of the following: 1. Only revenue is recorded as sales are made during the period; the cost of goods sold is recorded at the end of the period. 2. Cost of goods sold is determined as each sale is made. 3. Inventory purchases are recorded in an inventory account. 4. Inventory purchases are recorded in a purchases account. 5. Cost of goods sold is determined only at the end of the period by subtracting the cost of ending inventory from the cost of goods available for sale. 6. Both revenue and cost of goods sold are recorded during the period as sales are made. 7. The inventory is verified by a physical count.
The following are independent errors made by a company that uses a periodic inventory system: a. failure to record a purchase of inventory on credit (however, inventory was properly counted at the end of the period) b. expensing the purchase of a machine c. failure to accrue wages d. failure to record an allowance for uncollectibles e. including collections in advance as revenue f. including payments in advance as expenses g. failure to accrue warranty costs h. discount on a note payable issued for purchase of a machine is ignored i. failure to record depreciation expense on assets purchased during the year Required: Next Level Indicate the effect of each of the preceding errors on the companys assets, liabilities, shareholders equity, and net income in the year in which the error occurs. State whether the error causes an overstatement (+), an understatement (), or no effect (NE).
A company regularly purchases materials from a manufacturer on credit. Payments for these purchases occur within the companys operating cycle. They do not include interest and are established with an invoice outlining purchase details, credit terms, and shipping charges. Which current liability situation does this best describe? A. sales tax payable B. accounts payable C. unearned revenue D. income taxes payable
Record general journal entries to correct the errors described below. Assume that the incorrect entries were posted in the same period in which the errors occurred and were recorded using the periodic inventory system. a. A freight cost of 85 incurred on equipment purchased for use in the business was debited to Freight In. b. The issuance of a credit memo to Lang Company for 119 for merchandise returned was recorded as a debit to Purchases Returns and Allowances and a credit to Accounts Receivable, Lang Company. c. A cash sale of 68 to J. L. LaSalle was recorded as a sale on account. d. A purchase of merchandise from James Company in the amount of 750 with a 25 percent trade discount was recorded as a debit to Purchases and a credit to Accounts Payable of 750 each.