please answer the questions in attached photo from 1 to 10. For each case, identify the anomaly and propose the correct accounting treatment/answer:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Topic Video
Question

please answer the questions in attached photo from 1 to 10.

For each case, identify the anomaly and propose the correct accounting treatment/answer:                                                                                             

Question 1: (1* 10: 10 Marks)
Alpha company is a trading company that purchases and sales fruits and vegetables.
During the year 2020, the company shows the following transactions and events:
1) The company uses the perpetual inventory system to account for its inventory at
December 31, 2020 and its financial statements are disclosed without delay.
2) The company records sales when cash is received from customers and delay
expenses for the next year.
3) For credit purchase transactions, the accountant debit (merchandise inventory) and credit
(accounts receivable).
4) The company assumes the freight charges to its customers. The accountant debit (freight
in expenses) and credit (merchandise inventory).
5) One customer returned fruits to Alpha that were damaged. The accountant of the
company debit (purchase returns) and credit (accounts payable).
6) The cost of goods sold is determined after each sale as follow: beginning inventory -
purchases + ending inventory.
7) Net profit is computed by subtracting operating expenses from the cost of goods sold.
8) The accountant records merchandise inventory (stock) in the expenses section of the
income statement.
9) The company assumes that physical inventory is not important as it uses the
perpetual inventory system during the year.
10) The driver of the company has access to the inventory, he delivers the merchandise,
receives the cash and has access to the company books.
Required:
For each case, identify the anomaly and propose the correct accounting treatment/answer:
(1* 10: 10 Marks)
Transcribed Image Text:Question 1: (1* 10: 10 Marks) Alpha company is a trading company that purchases and sales fruits and vegetables. During the year 2020, the company shows the following transactions and events: 1) The company uses the perpetual inventory system to account for its inventory at December 31, 2020 and its financial statements are disclosed without delay. 2) The company records sales when cash is received from customers and delay expenses for the next year. 3) For credit purchase transactions, the accountant debit (merchandise inventory) and credit (accounts receivable). 4) The company assumes the freight charges to its customers. The accountant debit (freight in expenses) and credit (merchandise inventory). 5) One customer returned fruits to Alpha that were damaged. The accountant of the company debit (purchase returns) and credit (accounts payable). 6) The cost of goods sold is determined after each sale as follow: beginning inventory - purchases + ending inventory. 7) Net profit is computed by subtracting operating expenses from the cost of goods sold. 8) The accountant records merchandise inventory (stock) in the expenses section of the income statement. 9) The company assumes that physical inventory is not important as it uses the perpetual inventory system during the year. 10) The driver of the company has access to the inventory, he delivers the merchandise, receives the cash and has access to the company books. Required: For each case, identify the anomaly and propose the correct accounting treatment/answer: (1* 10: 10 Marks)
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Accounting Equation
Learn more about
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.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education