OBJ. 1 EX 7-1 Control of inventories Triple Creek Hardware Store currently uses a periodic inventory system. Kevin Carlton, the owner, is considering the purchase of a computer system that would make it feasible to switch to a perpetual inventory system. Kevin is unhappy with the periodic inventory system because it does not provide timely information on inventory levels. Kevin has noticed on several occasions that the store runs out of good-selling items, while too many poor-selling items are on hand. Kevin is also concerned about lost sales while a physical inventory is being taken. Triple Creek Hardware currently takes a physical inventory twice a year. To minimize distractions, the store is closed on the day inventory is taken. Kevin believes that closing the store is the only way to get an accurate inventory count. Will switching to a perpetual inventory system strengthen Triple Creek Hard- ware's control over inventory items? Will switching to a perpetual inventory system elimi- nate the need for a physical inventory count? Explain.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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OBJ. 1
EX 7-1 Control of inventories
ot odt o Triple Creek Hardware Store currently uses a periodic inventory system. Kevin Carlton, the
a ni nwode
owner, is considering the purchase of a computer system that would make it feasible to
switch to a perpetual inventory system.
Kevin is unhappy with the periodic inventory system because it does not provide timely
in agoul
(ouleVe information on inventory levels. Kevin has noticed on several occasions that the store runs
out of good-selling items, while too many poor-selling items are on hand.
Kevin is also concerned about lost sales while a physical inventory is being taken.
Triple Creek Hardware currently takes a physical inventory twice a year. To minimize
distractions, the store is closed on the day inventory is taken. Kevin believes that closing
the store is the only way to get an accurate inventory count.
Will switching to a perpetual inventory system strengthen Triple Creek Hard-
naint nido ware's control over inventory items? Will switching to a perpetual inventory system elimi-
omo nate the need for a physical inventory count? Explain. oonl
aidol no Jn9
UCOLLC
Transcribed Image Text:rcises OBJ. 1 EX 7-1 Control of inventories ot odt o Triple Creek Hardware Store currently uses a periodic inventory system. Kevin Carlton, the a ni nwode owner, is considering the purchase of a computer system that would make it feasible to switch to a perpetual inventory system. Kevin is unhappy with the periodic inventory system because it does not provide timely in agoul (ouleVe information on inventory levels. Kevin has noticed on several occasions that the store runs out of good-selling items, while too many poor-selling items are on hand. Kevin is also concerned about lost sales while a physical inventory is being taken. Triple Creek Hardware currently takes a physical inventory twice a year. To minimize distractions, the store is closed on the day inventory is taken. Kevin believes that closing the store is the only way to get an accurate inventory count. Will switching to a perpetual inventory system strengthen Triple Creek Hard- naint nido ware's control over inventory items? Will switching to a perpetual inventory system elimi- omo nate the need for a physical inventory count? Explain. oonl aidol no Jn9 UCOLLC
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