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ACC* - Accounting ACC* M115 Lecture Notes - Lecture 16: Perpetual Inventory, Operating Expense, Cash Register

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redminnow421
6 Jun 2020
School
CCC
Department
ACC* - Accounting
Course
ACC* - Accounting ACC* M115
Professor
Murphy

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Document Summary

2 systems to account inventory: perpetual inventory system: companies keep detailed records of the costs of each inventory purchase and sale. These records show the inventory that should be on hand for every item. Determining the cost of goods sold each time a sale occurs: periodic inventory system: companies do not keep detailed information records of the goods on hand throughout the period. Determining the costs of goods sold only at the end of the accounting period. Physical inventory to determine the cost of goods on hand. Selling merchandise with high unit values perpetual system. Companies record cash purchases by an increase in inventory and a decrease in in cash. The invoice indicates the total purchase price and other relevant information. Under the perpetual inventory system companies record purchases of merchandise for sale in the inventory account. Sales agreement: the seller or the buyer is to pay for transporting the goods to the buyer"s place.

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Related Questions

Which of the following statements about a periodic inventory system is true?

a. The increased use of computerized systems has increased the use of periodic systems.

b. The periodic system provides better control over inventories than a perpetual system

c. The company continuously maintained detailed records of the cost of each purchase and sale.

d. Companies determine the cost of goods sold only at the end of the accounting period.

Oahu Kiki tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each month, as if it usees a periodic inventory system. Assume Oahu Kiki's records how the following for the month of January. Sales totaled 330 units. Dates Units Unit Cost Total Cost Beginning Inventory January 1 Units 300 Unit Cost $90 Total Cost $27,000 Purchase January 15 Units 400 Unit Cost 100 Total Cost 40,000 Purchase January 24 Units 300 Unit Cost 120 Total Cost 36,000 Required: 1. Calculate the number and cost of goods available for sale Number of Goods Available for Sale Cost of Goods Available for Sale 2. Calculate the number of units in ending inventory. Ending Inventory units 3. Calculate the cost of ending inventory and cost of goods sold using the (a) FIFO, (b) LIFO, and (c)weighted average cost methods. Cost of Ending Inventory FIFO, LIFO, Weighted Average Cost Cost of Goods Sold FIFO, LIFO, Weighted Average Cost

Smiller Company uses a periodic inventory system. At the end of the annual accounting period, December 31, 2010, the accounting records for the most popular item in inventory showed the following:

Required:

Compute the cost of goods available for sale (a), cost of ending inventory (b), cost of goods sold (c) at December 31, 2010, under each of the following inventory costing methods. (show solutions and round to the nearest dollar)

1. Weighted average cost

2. First-in, first-out

3. Last-in, first-out

4. Specific identification, assuming that the first sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of February 20, 2010. Assume that the second sale was selected from the remainder of the beginning inventory, with the balance from the purchase of June 30, 2010.