ACC 311 Lecture Notes - Lecture 8: Perpetual Inventory, Retained Earnings, Trial Balance

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crimsoncod838

12 Dec 2017

School

University of Miami

Department

Accounting Business Administration

Course

ACC 311

Professor

andrewmcmartin

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Document Summary

Inventories include items held for sale in the ordinary course of business, or goods that will be used or consumed in the production of goods to be sold. For manufacturing companies, the inventory amount must be separated into raw materials, work in process, and finished goods. Goods sold (cogs): any difference between the perpetual inventory balance and the physical inventory count is recorded as an adjusting journal entry, periodic inventory system the cost of purchases is recorded into a temporary. Inventory and cogs is recorded as an adjusting journal entry. All items purchased for resale are debited to a purchases account. Requires an adjusting journal entry. made, requires two entries. All items purchased for resale go directly into inventory. Purchased 50 tennis racquets for the pro shop at each, on account. Sold 40 racquets at each, receiving cash. Periodic inventory method: smith, inc. , had the below unadjusted trial balance as of december 31, 2013.

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.

carmineserval589

The following data were extracted from the accounting records ofHarkins company for the year ended April 30,2014:

merchandise inventory, may 1,2013 380,000

merchandise incentory, april 30,2014 415,000

purchases 3,800,000

purchases returns and allowances 150,000

purchases discounts 80,000

sales 5,850,000

freight in 16,600

a) prepare the cost of merchandise sold section of the yearended April 30,2014, using the periodic inventory system.

b) determine the gross profit to be reported on the incomestatement for the year ended April 30,2014.

c) would gross profit be different if the perpetual inventorysystem was used instead of the periodic inventory system?

beigetortoise309

Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data for portable DVD players are as follows: Apr. 1 Inventory 36 units @ $45 10 Sale 30 units 15 Purchase 17 units @ $47 20 Sale 12 units 24 Sale 8 units 30 Purchase 40 units @ $49 The business maintains a perpetual inventory system, costing by the first-in, first-out method. Determine the cost of the merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 3. a. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Merchandise Sold Unit Cost column and in the Inventory Unit Cost column. Cost of the Merchandise Sold Schedule First-in, First-out Method Portable DVD Players Date Quantity Purchased Purchases Unit Cost Purchases Total Cost Quantity Sold Cost of Merchandise Sold Unit Cost Cost of Merchandise Sold Total Cost Inventory Quantity Inventory Unit Cost Inventory Total Cost Apr. 1 $ $ Apr. 10 $ $ Apr. 15 $ $ Apr. 20 Apr. 24 Apr. 30 Apr. 30 Balances $ $ b. Based upon the preceding data, would you expect the inventory to be higher or lower using the last-in, first-out method?

Perpetual Inventory Using FIFO

Beginning inventory, purchases, and sales data for portable DVD players are as follows:

Apr. 1	Inventory	36 units @ $45
10	Sale	30 units
15	Purchase	17 units @ $47
20	Sale	12 units
24	Sale	8 units
30	Purchase	40 units @ $49

The business maintains a perpetual inventory system, costing by the first-in, first-out method.

Determine the cost of the merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 3.

a. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Merchandise Sold Unit Cost column and in the Inventory Unit Cost column.

Cost of the Merchandise Sold Schedule
First-in, First-out Method
Portable DVD Players
Date	Quantity Purchased	Purchases Unit Cost	Purchases Total Cost	Quantity Sold	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
Apr. 1								$	$
Apr. 10					$	$
Apr. 15		$	$

Apr. 20

Apr. 24
Apr. 30

Apr. 30	Balances					$			$

b. Based upon the preceding data, would you expect the inventory to be higher or lower using the last-in, first-out method?

ACC 311 Lecture Notes - Lecture 8: Perpetual Inventory, Retained Earnings, Trial Balance

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