Financial Accounting - Access
4th Edition
ISBN: 9781259958533
Author: SPICELAND
Publisher: MCG
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Chapter 6, Problem 6.18E
1.
To determine
To Record: The transactions of Company SS using a periodic inventory system.
2.
To determine
To Record: The period-end adjustment to cost of goods sold on July 31.
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Students have asked these similar questions
39.
What is the major difference between a periodic and a perpetual inventory system?
a.Under the periodic inventory system, the purchase of inventory will be debited to the purchases account.
b.Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory.
c.Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the month.
d.All of these choices are correct.
59
On December 31, 2021, ABC Company sold merchandise for P 675,000 to BBB Company. The terms of the sale were net 30, FOB shipping point. The merchandise was shipped on December 31, 2021, and arrived at BBB on January 5, 2022.
Due to a clerical error, the sale was not recorded until January 2022 and the merchandise sold at a 35% markup on cost was included in inventory on December 31, 2021.
What was the effect of the error on net income for 2021?
Group of answer choices
Understated by 675,000
Understated by 500,000
Understated by 175,000
None of the choices
M7-17 Calculating Effect of Inventory Errors
For each of the following scenarios, determine the effect of the error on income in the current period and in the subsequent period. To answer these questions, rely on the inventory equation: Beginning inventory + Purchases - Cost of goods sold = Ending inventory
a. Porter Company received a shipment of merchandise costing $32,000 near the end of the fiscal year. The shipment was mistakenly recorded at a cost of $23,000.
b. Chiu, Inc., purchased merchandise costing $16,000. When the shipment was received, it was determined that the merchandise was damaged in shipment. The goods were returned to the supplier, but the accounting department was not notified and the invoice was paid.
c. After taking a physical count of its inventory, Murray Corporation determined that it had “shrink” of $12,500, and the books were adjusted accordingly. However, inventory costing $5,000 was never counted
Chapter 6 Solutions
Financial Accounting - Access
Ch. 6 - 1.What is inventory? Where in the financial...Ch. 6 - Prob. 2RQCh. 6 - What is the difference among raw materials...Ch. 6 - Prob. 4RQCh. 6 - Prob. 5RQCh. 6 - What is a multiple-step income statement? What...Ch. 6 - Cheryl believes that companies report cost of...Ch. 6 - What are the three primary cost flow assumptions?...Ch. 6 - 9.Which cost flow assumption generally results in...Ch. 6 - Prob. 10RQ
Ch. 6 - Prob. 11RQCh. 6 - 12.Explain how LIFO generally results in lower...Ch. 6 - Prob. 13RQCh. 6 - Explain how freight charges, purchase returns, and...Ch. 6 - Explain the method of reporting inventory at lower...Ch. 6 - 16.How is cost of inventory determined? How is net...Ch. 6 - 17.Describe the entry to adjust from cost to net...Ch. 6 - Prob. 18RQCh. 6 - Prob. 19RQCh. 6 - How is gross profit calculated? What is the gross...Ch. 6 - 21.Explain how the sale of inventory on account is...Ch. 6 - Prob. 22RQCh. 6 - Prob. 23RQCh. 6 - Prob. 24RQCh. 6 - Understand terms related to types of companies...Ch. 6 - Prob. 6.2BECh. 6 - Calculate cost of goods sold (LO62) At the...Ch. 6 - Prob. 6.4BECh. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Prob. 6.8BECh. 6 - Identify financial statement effects of FIFO and...Ch. 6 - Prob. 6.10BECh. 6 - Record freight charges for inventory using a...Ch. 6 - Record purchase returns of inventory using a...Ch. 6 - Prob. 6.13BECh. 6 - Prob. 6.14BECh. 6 - Prob. 6.15BECh. 6 - Prob. 6.16BECh. 6 - Prob. 6.17BECh. 6 - Prob. 6.18BECh. 6 - Record purchase returns of inventory using a...Ch. 6 - Refer to the information in BE613, but now assume...Ch. 6 - Prob. 6.21BECh. 6 - Prob. 6.22BECh. 6 - Calculate cost of goods sold (LO62) Russell Retail...Ch. 6 - Prob. 6.2ECh. 6 - Prob. 6.3ECh. 6 - Calculate inventory amounts when costs are rising...Ch. 6 - Calculate inventory amounts when costs are...Ch. 6 - Record Inventory transactions using o perpetual...Ch. 6 - Record inventory purchase and purchase return...Ch. 6 - Prob. 6.8ECh. 6 - Prob. 6.9ECh. 6 - Prob. 6.10ECh. 6 - Record transactions using a perpetual system...Ch. 6 - Record transactions using a perpetual system...Ch. 6 - Calculate inventory using lower of cost and net...Ch. 6 - Prob. 6.14ECh. 6 - Calculate cost of goods sold, the inventory...Ch. 6 - Prob. 6.16ECh. 6 - Prob. 6.17ECh. 6 - Prob. 6.18ECh. 6 - Record inventory purchases and sales using a...Ch. 6 - Mulligan Corporation purchases inventory on...Ch. 6 - Complete the accounting cycle using Inventory...Ch. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Prob. 6.2APCh. 6 - Prob. 6.3APCh. 6 - Prob. 6.4APCh. 6 - Calculate ending inventory end cost of goods sold...Ch. 6 - Record transactions using a perpetual system,...Ch. 6 - Prob. 6.7APCh. 6 - Prob. 6.8APCh. 6 - Record transactions and prepare a partial income...Ch. 6 - Prob. 6.10APCh. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Prob. 6.2BPCh. 6 - Prob. 6.3BPCh. 6 - Prob. 6.4BPCh. 6 - Prob. 6.5BPCh. 6 - Record transactions using a perpetual system,...Ch. 6 - Prob. 6.7BPCh. 6 - Use the inventory turnover retio end gross profit...Ch. 6 - Record transactions and prepare a partial income...Ch. 6 - Determine the effects of inventory errors using...Ch. 6 - Great Adventures (This is a continuation of the...Ch. 6 - Prob. 6.2APFACh. 6 - Prob. 6.3APFACh. 6 - Comparative Analysis American Eagle Outfitters,...Ch. 6 - Prob. 6.5APECh. 6 - Prob. 6.6APIRCh. 6 - Written Communication You have just been hired as...Ch. 6 - Prob. 6.8APEM
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- ( Appendix 6B) Refer to the information for Morgan Inc. above. If Morgan uses a periodic inventory system, what is the cost of ending inventory under LIFO at April 30? a. $32,800 b. $38,400 c. $63,600 d. $69,200arrow_forwardRefer to the information for Morgan Inc. above. If Morgan uses a perpetual inventory system, what is the cost of ending inventory under FIFO at April 30? a. $32,500 b. $38,400 c. $63,600 d. $69,500arrow_forward( Appendix 6B) Refer to the information for Morgan Inc. above. If Morgan uses a periodic inventory system, what is the cost of goods sold under FIFO at April 30? a. $32,800 b. $38,400 c. $63,600 d. $69,200arrow_forward
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- Given the following information for the Raquel Company who uses the periodic inventory system: Date Cost Market December 31, 2018 $500 $500 December 31, 2019 700 650 December 31, 2020 800 730 If the allowance method of recording lower of cost or NRV is in use, which December 31, 2020, journal entry is correct? a. Loss Due to Write-Down on Inventory 70 Allowance to Reduce Inventory to NRV 70 b. Loss Due to Write-Down of Inventory 20 Allowance to Reduce Inventory to NRV 20 c. Allowance to Reduce Inventory to NRV 800 Income Summary 800 d. Inventory 730 Income Summary 730arrow_forwardCompany A uses the FIFO method for internal reporting purposes and LIFO for external reporting purposes. The following information is available for 2025 and 2024 : 12//31//2025 12//31//2024 FIFO Inventory $182,000 $187,000 LIFO Inventory $174,000 $176,000 What is the appropriate journal entry at 12//31//2025 to adjust the account balances from FIFO-based to LIFO-based amounts? LIFO Reserve 8,000 8,000 Cost of Goods Sold LIFO Reserve 3,000 3,000 Cost of Goods Sold 3,00 Cost of Goods Sold 8,000 LIFO Reserve 8,000 Cost of Goods Sold 3,000 LIFO Reserve 3,000arrow_forward3 On December 31, 2021, ABC Company sold merchandise for P 675,000 to BBB Company. The terms of the sale were net 30, FOB shipping point. The merchandise was shipped on December 31, 2021, and arrived at BBB on January 5, 2022. Due to a clerical error, the sale was not recorded until January 2022 and the merchandise sold at a 35% markup on cost was included in inventory on December 31, 2021. If left unattended, what was the effect of the error on cost of goods sold for 2022? Group of answer choices Overstated by 175,000 None of the choices Overstated by 675,000 Overstated by 500,000arrow_forward
- 4.Fig Company’s inventory at December 31, 2021 was P570,000 based on a physical count of goods priced at cost and before any necessary year-end adjustments relating to the following:• Included in the physical count were goods billed to a customer FOB shipping point on December 31, 2021. These goods had a cost of P15,000 and were picked up by the carrier only on January 10, 2022.• Goods shipped FOB shipping point on December 28, 2021 from a vendor to Fig Company were received on January 4 , 2022. The invoice cost was P25,000.• Goods shipped from Fig Company to a customer, terms FOB destination, are still in transit at December 31, 2021. The goods, with a selling price of P120,500, were received by the customer on January 5, 2022. The company sells goods at a 25% markup on cost.What amount should Fig Company report as inventory in its December 31, 2021 statement of financial position? a. 685,375 b.691,400 c. 676,400 d.670,375arrow_forwardPB7-1 (Algo) Analyzing the Effects of Four Alternative Inventory Methods in a Periodic Inventory System [LO 7-3] Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the accounting period, January 31. The inventory’s selling price is $9 per unit. Transactions Unit Cost Units Total Cost Inventory, January 1 $ 2.50 260 $ 650 Sale, January 10 (200) Purchase, January 12 3.00 310 930 Sale, January 17 (150) Purchase, January 26 4.00 55 220 Required: Compute the amount of goods available for sale, ending inventory, and cost of goods sold at January 31 under each of the following inventory costing methods:a. Weighted average cost.b. First-in, first-out.c. Last-in, first-out.d. Specific identification, assuming that the January 10 sale…arrow_forward1. U.S. public companies using LIFO also report the amount that inventory wouldincrease (oroccasionally decrease) if the company had instead used FIFO. See file please.arrow_forward
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