College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Chapter 14, Problem 7RQ
To determine
State the reason for which it is important to make end-of-period adjustments for merchandise sold this year, but expected to be returned next period.
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At the end of the year, a company has to record an adjusting entry for the amount of sales made in the current year that it expects will be returned in the next year. Assuming the periodic inventory system is used, which of the following adjusting entries would record this estimate?
a.Debit Sales Returns and Allowances and credit Merchandise Inventory
b.Debit Income Summary and credit Estimated Returns Inventory
c.Debit Estimated Returns Inventory and credit Cost of Goods Sold
d.Debit Sales Returns and Allowances and credit Customer Refunds Payable
Under the perpetual inventory method, what account is credited when adjusting for the estimated cost of the merchandise sold this period, but expected to be returned next period?
If a company has goods in transit at the end of the year that were shipped FOB shipping point, how should these goods be accounted for on the company's books at the end of the year?
a.The goods should be included in the inventory value at the end of the year.
b.Half of the value of the goods in transit should be included in the inventory value at the end of the year.
c.The goods should be excluded from the inventory value at the end of the year.
d.The goods should be considered held for sale on consignment at the end of the year.
Chapter 14 Solutions
College Accounting, Chapters 1-27
Ch. 14 - Under the periodic inventory system, the beginning...Ch. 14 - Under the periodic inventory system, the ending...Ch. 14 - The cash received in advance before delivering a...Ch. 14 - Unearned revenue is adjusted into an expense...Ch. 14 - Sales Returns and Allowances is classified as a...Ch. 14 - Under the periodic inventory system, what account...Ch. 14 - Under the periodic inventory system, what account...Ch. 14 - Under the periodic inventory system, what account...Ch. 14 - Unearned revenue is classified as what type of...Ch. 14 - Under the perpetual inventory method, what account...
Ch. 14 - Prepare the cost of goods sold section for Josephs...Ch. 14 - The Venice Theatre sold and collected cash of...Ch. 14 - Information relating to inventory for Janie Par...Ch. 14 - Using the spreadsheet provided below, prepare the...Ch. 14 - Prob. 5CECh. 14 - A firm is preparing to make adjusting entries at...Ch. 14 - What spreadsheet amounts are used to compute cost...Ch. 14 - Why are both the debit and credit amounts in the...Ch. 14 - What is an unearned revenue?Ch. 14 - Give three examples of unearned revenue.Ch. 14 - Prob. 6RQCh. 14 - Prob. 7RQCh. 14 - A firm is preparing to make adjusting entries at...Ch. 14 - ADJUSTMENT FOR MERCHANDISE INVENTORY USING T...Ch. 14 - ADJUSTMENT FOR MERCHANDISE INVENTORY USING T...Ch. 14 - CALCULATION OF COST OF GOODS SOLD: PERIODIC...Ch. 14 - CALCULATION OF COST OF GOODS SOLD: PERIODIC...Ch. 14 - ADJUSTMENT FOR UNEARNED REVENUES USING T ACCOUNTS...Ch. 14 - MERCHANDISE INVENTORY ADJUSTMENTS: PERIODIC...Ch. 14 - DETERMINING THE BEGINNING AND ENDING INVENTORY...Ch. 14 - JOURNALIZE ADJUSTING ENTRIES FOR A MERCHANDISING...Ch. 14 - JOURNAL ENTRIES UNDER THE PERPETUAL INVENTORY...Ch. 14 - ADJUSTMENTS FOR A MERCHANDISING BUSINESS:...Ch. 14 - JOURNALIZE ADJUSTING ENTRY FOR INVENTORY...Ch. 14 - PREPARATION OF ADJUSTMENTS ON A SPREADSHEET FOR A...Ch. 14 - WORKING BACKWARD FROM ADJUSTED TRIAL BALANCE TO...Ch. 14 - ADJUSTMENT FOR MERCHANDISE INVENTORY USING T...Ch. 14 - ADJUSTMENT FOR MERCHANDISE INVENTORY USING T...Ch. 14 - CALCULATION OF COST OF GOODS SOLD: PERIODIC...Ch. 14 - CALCULATION OF COST OF GOODS SOLD: PERIODIC...Ch. 14 - ADJUSTMENT FOR UNEARNED REVENUES USING T ACCOUNTS...Ch. 14 - MERCHANDISE INVENTORY ADJUSTMENTS: PERIODIC...Ch. 14 - DETERMINING THE BEGINNING AND ENDING INVENTORY...Ch. 14 - JOURNALIZE ADJUSTING ENTRIES FOR A MERCHANDISING...Ch. 14 - JOURNAL ENTRIES UNDER THE PERPETUAL INVENTORY...Ch. 14 - ADJUSTMENTS FOR A MERCHANDISING BUSINESS:...Ch. 14 - JOURNALIZE ADJUSTING ENTRY FOR INVENTORY...Ch. 14 - Prob. 12SPBCh. 14 - WORKING BACKWARD FROM ADJUSTED TRIAL BALANCE TO...Ch. 14 - A friend of yours recently opened Abracadabra, a...Ch. 14 - Jason Tierro, an inventory clerk at Lexmar...Ch. 14 - John Neff owns and operates Waikiki Surf Shop. A...Ch. 14 - Block Foods, a retail grocery store, has agreed to...
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Similar questions
- Under the periodic inventory system, what account is debited when an estimate is made for sales made this year, but expected to be returned next year? (a) Sales Returns and Allowances (b) Merchandise Inventory (c) Customer Refunds Payable (d) Salesarrow_forwardUnder the periodic inventory system, what account is credited when an estimate is made for sales made this year, but expected to be returned next year? (a) Merchandise Inventory (b) Customer Refunds Payable (c) Sales (d) Sales Returns and Allowancesarrow_forwardUnder the periodic inventory system, what account is debited when an estimate is made for the cost of merchandise inventory sold this year, but expected to be returned next year? (a) Estimated Returns Inventory (b) Sales Returns and Allowances (c) Merchandise Inventory (d) Customer Refunds Payablearrow_forward
- Identify the errors in the following schedule of the cost of merchandise sold for the year ended May 31, 2018:arrow_forwardWhich of the following accounts would be closed at the end of the year using the perpetual inventory system? a. Cost of Goods Sold b. Merchandise Inventory c. Accounts Receivable d. Accounts Payablearrow_forwardIf merchandise inventory is understated at the end of 2017, and the error is not discovered, how will net incomebe affected in 2018?arrow_forward
- Why do companies that use perpetual inventory systems alsotake an annual physical inventory? When is this physicalinventory usually taken? Why?arrow_forwardPurchase of merchandise on account on December 27, 2019 amounting to P50,000 was not recorded until it was paid on January 2020. The merchandise was properly included in the ending inventory in 2019. Questions: What is the adjusting entry at the end of 2019? What is the adjusting entry for 2020 if not adjusted during 2019? What are the accounts affected?arrow_forwardWhich of the following transactions would not result in an adjustment to the inventory account under a perpetual inventory system? a.The sale of merchandise for cash b.The sale of merchandise on credit c.The receipt of payment from a customer within the discount period d.The return of merchandise by a customerarrow_forward
- Record the end of period adjustment to determine the amount of cost of goods sold, including any "book-to-physical" adjustment that might be needed. (How to get the inventory, ending?arrow_forwardWhich 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.arrow_forwardConsider each of the following independent situations. Should a company report the goods in its inventory? (a) Goods purchased by the company with shipping terms FOB shipping point that are in transit at the end of the year (b) Goods received by the company on consignment (c) An estimate of the amount of goods sold by the company that it expects the buyer to return (d) Goods required to be purchased by the company under an unconditional purchase obligationarrow_forward
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