7-5. End-of-period adjustments.boiవెంచంLocal Hardware uses the periodic inventory method. At the end of the accounting period, thecompany takes a physical inventory and finds that $20,671 of goods are on hand. Purchasesduring the period were $76,216, and inventory at the beginning of the period was $25,632.Freight on merchandise coming into the business was $2,799, and returns of merchandise tosuppliers amounted to $1,776. In the schedule below, record the journal entry to be made byLocal at the end of the accounting period to close the old inventory and record the new one.7-6. End-of-period adjustments.ba3Gnu Company uses the perpetual method of recording inventory. Its records show the Inventoryaccount balance of $15,889. A count of the inventory, however, finds only $14,278 of inventoryon hand. Record the entry needed by Gnu to correct its records. Assume that inventorydifferences of more than 5% of the cost of inventory on hand will have a significant impact onthe income statement amounts.Provide Gnu with at least three reasons for the difference in recorded and physical inventoryamounts.

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Answered: 7-5. End-of-period adjustments. boi…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Nittany Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1: Inventory, December 31, prior year For the current year: Purchase, March 21 Ending inventory Cost of goods sold FIFO Units 1,870 LIFO 5,150 2,990 4,050 Purchase, August 1 Inventory, December 31, current year Required: Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods. Note: Round "Average cost per unit" to 2 decimal places and final answers to nearest whole dollar amount. Unit Cost $4 6 7 Average Cost
Deala Ltd. (DL) is a retailer of office equipment. The company uses a periodic inventory system and on October 1 had 1,900 units of inventory with a total cost of $41,800. During the month of October, DL had the following inventory-related transactions: Date Oct. 9 12 17 25 Oct. 31 28 Explanation Purchase Purchases Sale Purchase: Cost of ending inventory Cost of goods sold Inventory Sale Purchases Cost of Goods Sold Units 5,100 $ Inventory 4.400 Date Account Titles and Explanation (5,100) 4,100 (6.300 Y Calculate ending inventory at October 31 and cost of goods sold for the month assuming that DL used (1) FIFO and (2) average cost. (Round average cost per unit to 2 decimal places, e.g. 50.25 and all other answers to the nearest whole dollar, e.g. 5,275.) FIFO Unit Cost/Price $23.00 93480 22.50 258100 38.00 22.80 38.00 Total Cost $117,300 99,000 Assuming the company uses FIFO, record the adjusting journal entry needed at the end of October to update the Inventory and Cost of Goods Sold…
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[The following information applies to the questions displayed below.] Autumn Company began the month of October with inventory of $25,000. The following inventory transactions occurred during the month: The company purchased inventory on account for $37,000 on October 12. Terms of the purchase were 2/10, n/30. Autumn uses the net method to record purchases. The inventory was shipped f.o.b. shipping point and freight charges of $600 were paid in cash. On October 31, Autumn paid for the inventory purchased on October 12 During October inventory costing $19,500 was sold on account for $30,000. It was determined that inventory on hand at the end of October cost $42,360. Assuming Autumn Company uses a periodic inventory system, prepare journal entries for the above transactions including the adjusting entry at the end of October to record cost of goods sold. Autumn considers purchase discounts lost as part of interest expense.
Freedman Company estimates that sales this year of $12,000 will be returned next year and customers will be granted a full refund. Which of the following journal entries would Freedman Company record as part of its year-end adjustments assuming it uses the perpetual inventory system? a.Debit Estimated Returns Inventory for $12,000 and credit Income Summary for $12,000 b.Debit Sales Returns and Allowances for $12,000 and credit Cost of Goods Sold for $12,000 c.Debit Inventory Short and Over for $12,000 and credit Merchandise Inventory for $12,000 d.Debit Sales Returns and Allowances for $12,000 and credit Customer Refunds Payable for $12,000
Stanley Flooring Company’s perpetual inventory records indicate that $1,129,000 of mer-chandise should be on hand on December 31, 20Y1. The physical inventory indicates that $1,109,300 of merchandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage for Stanley Flooring Company for the year ended December 31, 20Y1. Assume that the inventory shrinkage is a normal amount.
Larkspur Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May. Inventory, May 1 Purchases (gross) Freight-in Sales revenue Sales returns Purchase discounts (a) $156,500 628,400 31,900 1,029,400 74,600 10,800 Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales. The estimated inventory at May 31 $ tA
FAD Company uses a periodic inventory system and its inventory records for the period contain the following information: Beginning inventory (170 units @ $69/unit) $11,730 Purchases (245 units @ $69/unit) 16,905 Ending inventory (220 units @ $69/unit) 15,180 What is the amount of cost of goods available for sale?
The following information applies to the questions displayed below.] Autumn Company began the month of October with inventory of $25,000. The following inventory transactions occurred during the month: The company purchased inventory on account for $37,000 on October 12. Terms of the purchase were 2/10, n/30. Autumn uses the net method to record purchases. The inventory was shipped f.o.b. shipping point and freight charges of $600 were paid in cash. On October 31, Autumn paid for the inventory purchased on October 12. During October inventory costing $19,500 was sold on account for $30,000. It was determined that inventory on hand at the end of October cost $42,360. 1. Assuming Autumn Company uses a perpetual inventory system, prepare journal entries for the above transactions. The company purchased inventory on account for $37,000 on October 12. Terms of the purchase were 2/10, n/30. Autumn uses the net method to record purchases. The inventory was shipped f.o.b. shipping point and…
Darlington Company experienced the following business events during its first month of operations. The company uses the perpetual inventory system. 1) The company purchased $12,900 of merchandise on account under terms 2/10, n/30. 2) The company returned $1,600 of merchandise to the supplier before payment was made. 3) The liability was paid within the discount period. 4) All of the merchandise purchased was sold for $19,600 cash. What is the gross margin that results from these four transactions?
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[The following information applies to the questions displayed below.] Autumn Company began the month of October with inventory of $33,000. The following inventory transactions occurred during the month: The company purchased inventory on account for $49,000 on October 12. Terms of the purchase were 210/210 , n30/�30 . Autumn uses the net method to record purchases. The inventory was shipped f.o.b. shipping point and freight charges of $680 were paid in cash. On October 31, Autumn paid for the inventory purchased on October 12. During October inventory costing $20,700 was sold on account for $31,600. It was determined that inventory on hand at the end of October cost $61,000. 1. Assuming Autumn Company uses a perpetual inventory system, prepare journal entries for the above transactions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

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