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Scott
Scott, MIT Graduate
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Accounting

Customer Question








1) Anthony Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.



 
























































































































































Date



Activities



Units Acquired at Cost



Units Sold at Retail




Mar.



1




Beginning inventory




160



 units



 @ $52.20/unit








Mar.



5




Purchase




255



 units



 @ $57.20/unit








Mar.



9




Sales








320



 units



@ $87.20/unit




Mar.



18




Purchase




115



 units



 @ $62.20/unit








Mar.



25




Purchase




210



 units



 @ $64.20/unit








Mar.



29




Sales








190



 units



@ $97.20/unit

































 





Totals




740



 units





510



 units






















































 


 



10 points


 










3.



Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, the March 9 sale consisted of 95 units from beginning inventory and 225 units from the March 5 purchase; the March 29 sale consisted of 75 units from the March 18 purchase and 115 units from the March 25 purchase. (Due to rounding, the sum of Cost of Goods Sold and Ending inventory may not equal the Cost of Good available for sales. Round your per unit costs to 3 decimal places and inventory balances to the nearest dollar amount. Omit the "$" sign in your response.)



 


 


2) The inventory turnover ratio:


























 



Calculation depends on the company's inventory valuation method.



 



Reveals how many times a company turns over (sells) its merchandise inventory.



 



Is used to measure solvency.



 



Validates the acid-test ratio.



 



Is used to analyze profitability.



 


 









3)  On December 31 of the current year, Hewett Company reported an ending inventory balance of $213,000. The following additional information is also available:



 
























Hewett sold goods costing $37,600 to Trump Enterprises on December 28 and shipped the goods on that date with shipping terms of FOB shipping point. The goods were not included in the ending inventory amount of $213,000 because they were not in Hewett's warehouse.





Hewett purchased goods costing $43,600 on December 29. The goods were shipped FOB destination and were received by Hewett on January 2 of the following year. The shipment was a rush order that was supposed to arrive by December 31. These goods were included in the ending inventory balance of $213,000.





Hewett's ending inventory balance of $213,000 included $14,600 of goods being held on consignment from Rumsfeld Company. (Hewett Company is the consignee.)





Hewett's ending inventory balance of $213,000 did not include goods costing $94,600 that were shipped to Hewett on December 27 with shipping terms of FOB destination and were still in transit at year-end.



 









Based on the above information, the correct balance for ending inventory on December 31 is:



 


























 



$198,400



 



$169,400



 



$192,400



 



$154,800



 



$207,000



4) The amount recorded for merchandise inventory includes all of the following except:


























 



Freight costs paid by the buyer.



 



Purchase discounts.



 



Trade discounts.



 



Returns and allowances.



 



Freight costs paid by the seller.


 


 


5)







































































Aug.



1



Purchased merchandise from Abilene Company for $6,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.



 



4



At Abilene's request, Stone paid $100 cash for freight charges on the August 1 purchase, reducing the amount owed to Abilene.



 



5



Sold merchandise to Lux Corp. for $4,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $3,000.



 



8



Purchased merchandise from Welch Corporation for $5,300 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. The invoice showed that at Stone’s request, Welch paid the $240 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges.)



 



9



Paid $120 cash for shipping charges related to the August 5 sale to Lux Corp.



 



10



Lux returned merchandise from the August 5 sale that had cost Stone $500 and been sold for $700. The merchandise was restored to inventory.



 



12



After negotiations with Welch Corporation concerning problems with the merchandise purchased on August 8, Stone received a credit memorandum from Welch granting a price reduction of $800.



 



15



Received balance due from Lux Corp. for the August 5 sale less the return on August 10.



 



18



Paid the amount due to Welch Corporation for the August 8 purchase less the price reduction granted.



 



19



Sold merchandise to Trax Co. for $3,600 under credit terms of 1/10, n/30, FOB shipping point, invoice dated August 19. The merchandise had cost $2,500.



 



22



Trax requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Stone sent Trax a $600 credit memorandum to resolve the issue.



 



29



Received Trax's cash payment for the amount due from the August 19 sale.



 



30



Paid Abilene Company the amount due from the August 1 purchase.



 









Prepare journal entries to record the above merchandising transactions of Stone Company, which applies the perpetual inventory system. (Identify each receivable and payable; for example, record the purchase on August 1 in Accounts Payable—Abilene.) (Omit the "$" sign in your response.)



 



























































































































































































































































































































Date



General Journal



Debit



Credit



Aug. 1   



 



 



 



 



 



 



 



 



 



 



 



4   



 



 



 



 



 



 



 



 



 



 



 



5   



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



8   



 



 



 



 



 



 



 



 



 



 



 



9   



 



 



 



 



 



 



 



 



 



 



 



10   



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



12   



 



 



 



 



 



 



 



 



 



 



 



15   



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



18   



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



19   



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



22   



 



 



 



 



 



 



 



 



 



 



 



29   



 



 



 



 



 



 



 



 



 



 



 



 



 



 



 



30   



 



 



 



 



 



 



 








 


 


6)









A company has inventory of 19 units at a cost of $21 each on June 1. On June 3, it purchased 31 units at $23 each. 22 units are sold on June 5. Using the FIFO periodic inventory method, what is the cost of the 22 units that were sold?



 


























 



$472.



 



$462.



 



$483.



 



$468.



 



$493.



A company uses the perpetual inventory system and recorded the following entry

  
This entry reflects a:


























 



Payment of the account payable and recognition of a 2% cash discount taken.



 



Payment of the account payable and recognition of a 1% cash discount taken.



 



Purchase of merchandise on credit.



 



Sale of merchandise on credit.



 



Return of merchandise.



7) On October 1, Robinson Company sold merchandise in the amount of $7,200 to Rosser, with credit terms of 1/10, n/30. The cost of the items sold is $5,400. Robinson uses the perpetual inventory system. The journal entry or entries that Robinson will make on October 1 is:


 









8) A company purchased $2,600 of merchandise on December 5. On December 7, it returned $600 worth of merchandise. On December 8, it paid the balance in full, taking a 3% discount. The amount of the cash paid on December 8 equals:



 


























 



$2,600.



 



$600.



 



$1,940.



 



$2,522.



 



$2,000.



 



Bottom of Form



 


9)









A company had inventory on November 1 of 5 units at a cost of $11 each. On November 2, they purchased 18 units at $13 each. On November 6 they purchased 14 units at $16 each. On November 8, 16 units were sold for $46 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?



 


























 



$263



 



$258



 



$242



 



$274



 



$315



 



 

Submitted: 6 years ago.
Category: Homework
Expert:  F. Naz replied 6 years ago.
Data is so confusing, please arrange and send it properly. You may upload the word format file at www.mediafire.com and give me the sharing key, thanks.
Customer: replied 6 years ago.
There were some other questions earlier. I really don't understand the perpetual inventory system.
Customer: replied 6 years ago.
http://www.mediafire.com/?p77bocmsn6b94d5
Customer: replied 6 years ago.
Just curious as to whether or not the data was received and how long a response will take?
Expert:  F. Naz replied 6 years ago.
I have recieved but they are too many, You will receive the email for fair price soon. thanks.
Customer: replied 6 years ago.
I no longer need an answer, this process was too long and drawn out and it took too long for a response.