Concept explainers
Closing Entries:
The accounting entries which are made at the end of an accounting period for transfer of balances of temporary accounts to permanent accounts. These entries are generally made in manual accounting system.
Rules of
To increase the balance of account one needs to debit assets, expenses, losses and credit all the liabilities, revenues and gains including capital. To decrease the balance of account credit all assets, expenses, losses and debit all liabilities, revenues and gains including capital.
Perpetual Inventory System:
The inventory system in which the inventory accounts are updated on each purchase or sale in inventory. Quantities of inventory are updated on continuous basis. This can be done by integrating the inventory system to order entry and to the retail sale point of system.
1.
To prepare: Closing entries in the books of Company C.
2.
To compute: Ratio of sales returns by gross sales.
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Chapter 4 Solutions
FINANCIAL ACCOUNTING FUNDAMENTALS W/ CO
- Perpetual inventory using FIFO Assume that the business in Exercise 6-5 maintains a perpetual inventory system, costing by the first-in, first-out method. Determine the cost of goods sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 3.arrow_forwardPerpetual inventory using LIFO Assume that the business in Exercise 6-3 maintains a perpetual inventory system, costing by the last-in, first-out method. Determine the cost of goods sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 4.arrow_forwardAssume that the business in Exercise 6-9 maintains a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale, assuming the first-in, first-out method. Present the data in the form illustrated in Exhibit 3.arrow_forward
- Journalize these transactions of september assuimg the perpetual inventory system is being used identify each tranasaction of account payable and receivable with vendor or customer namearrow_forwardTatum Company has four products in its inventory. Information about the December 31, 2021, inventory is as follows: Total Net Product Total Cost Realizable Value $156,000 108,000 78,000 48,000 $118,000 128,000 68, 000 68, 000 101 102 103 104 Required: 1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or net realizable value (LCNRV) rule is applied to individual products. 2. Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or net realizable value (LCNRV) rule is applied to individual products. Inventory Value Product Cost NRV 101 $ 156,000 $ 118,000 102 108,000 128,000 103 78,000 68,000 104 48,000 68,000 $ 390,000arrow_forwardRequired information [The following information applies to the questions displayed below.] Nix'It Company's ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balances (Nix'lt uses the perpetual inventory system). Merchandise inventory T. Nix, Capital T. Nix, Withdrawals Sales Sales discounts $ 44,800 129,300 7,000 161,600 4,300 Miscellaneous expenses $ 5,100 109,200 11,700 39,500 5,000 Sales returns and allowances Cost of goods sold Depreciation expense Salaries expense A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $42,950.arrow_forward
- journalize the december transaction and adjusting entries assuming bramble use the perpetual inventory methodarrow_forwardWhich journal entry is correct when there is a sale under a perpetual inventory and FOB shipping point conditions: a. Dr. Merchandise Inventory Cr. Cash b. Dr. Freight-out Cr. Cash c. Dr. Freight-in Cr. Cash d. Dr. Account Payable Cr. Merchandise Inventoryarrow_forwardPurchases Returns and Allowances All of these. 6. When preparing closing entries under the periodic inventory system, Sales and Purchases Returns and Allowances are both closed in the same entry. (1Point) True O False 7. FOB Shipping point means that the sellerincurs the shipping costs. D (1 Point) Truearrow_forward
- Under a periodic inventory system, closing entries will include Oa. debits to Sales, Purchases Returns and Allowances, and Purchases Discounts Ob. adjustments to Merchandise Inventory to match physical inventory Oc. credits to Purchases and Sales Discounts Od. All of these choices are correct.arrow_forwardUsing the chart of accounts, prepare a journal entry under perpetual inventory system. Thank you!arrow_forwardRequired information [The following information applies to the questions displayed below.] Nix'lt Company's ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balances (Nix'lt uses the perpetual inventory system). Merchandise inventory т. Nix, Capital T. Nix, Withdrawals Sales Sales discounts $ 46,800 133,300 7,000 163,600 4,700 $ 4,700 110,400 12,100 41,500 5,000 Sales returns and allowances Cost of goods sold Depreciation expense Salaries expense Miscellaneous expenses A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $44,750.arrow_forward
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