Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Textbook Question
Chapter 5A, Problem 6PB
Paige’s Office Paper Company uses a perpetual inventory system, so the cost of goods sold is recorded and the inventory records are updated at the time of every sale. The company’s accounting records showed the following related to September 2009 transactions:
On September 30, 2009, Paige conducted a physical count of its inventory and discovered there were actually 1,900 units of inventory on hand.
Requirements
- 1. Using the information from the physical count, correct Paige’s Office Paper’s cost of goods sold for September.
- 2. How would this correction change the financial statements for the month?
- 3. What are some possible causes of the difference between the inventory amounts in the company’s accounting records and the inventory amount from the physical count?
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The following inventory transactions occurred at Zapata, Inc., which uses a perpetual inventory system:
October 2
Purchased 50 units of inventory from a supplier on credit. The goods cost $30 each and the credit terms were 2/10, n/30. The shipping costs were $100 under the terms FOB destination and Zapata received the inventory on October 3rd.
October 4
Returned 5 units of inventory from the October 2nd transaction to the supplier.
October 6
Sold 15 of the units purchased on October 2nd for $50 each to customers for cash.
October 7
October 10
Accepted a return of one unit of inventory from an October 6th customer for a cash refund.
Established a petty cash fund for $300.
October 11
October 15
October 28
Paid the supplier for one-half of the inventory purchased on October 2nd, net of any returns.
Used $20 out of petty cash to pay for stamps (postage expense).
Purchased 10 units of…
Crandall Distributors uses a perpetual inventory system and has the following data available for inventory, purchases, and sales for a recent year: Required:1. Compute the cost of ending inventory and the cost of goods sold using the specific identification method. Assume the ending inventory is made up of 40 units from beginning inventory, 30 units from Purchase 1, 80 units from Purchase 2, and 40 units from Purchase 3.2. Compute the cost of ending inventory and cost of goods sold using the FIFO inventory costing method.3. Compute the cost of ending inventory and cost of goods sold using the LIFO inventory costing method.4. Compute the cost of ending inventory and cost of goods sold using the average cost inventory costing method. (Note: Use four decimal places for per-unit calculations and round allother numbers to the nearest dollar.) 5.…
Chapter 5A Solutions
Financial Accounting
Ch. 5A - Berry Corporation miscounted the ending inventory...Ch. 5A - How would each of the following inventory errors...Ch. 5A - How would each of the following inventory errors...Ch. 5A - Ians Small Appliances reported cost of goods sold...Ch. 5A - Tire Pro Companys records reported the following...Ch. 5A - Matrix Company uses a periodic, weighted average...Ch. 5A - Paiges Office Paper Company uses a perpetual...
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