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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

ADJUSTMENT FOR MERCHANDISE INVENTORY USING T ACCOUNTS: PERIODIC INVENTORY SYSTEM Ibby Smith owns and operates Ibby’s Ice Cream Cones. Her beginning inventory as of January 1, 20--, was $45,000, and her ending inventory as of December 31, 20--, was $57,000. Set up T accounts for Merchandise Inventory and Income Summary and perform the year-end adjustment for Merchandise Inventory.

To determine

Prepare T-accounts for merchandise inventory and income summary and perform the year-end adjustment for merchandise inventory.

Explanation

Adjustments for merchandise inventory- Periodic inventory system:

The purchase account is debited and cash or accounts payable is credited, if merchandise inventory is purchased and, cash or accounts receivables account is debited and sales account is credited, if merchandise inventory is sold under periodic inventory system.

T-account:

T-account is the form of the ledger account, where the journal entries are posted to this account...

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