1. (a) "The steps in the accounting cycle for a merchandiser are different from the accounting cycle for a service enterprise." Do you agree or disagree? (b) Is the measurement of net income for a merchandiser conceptually the same as for a service enterprise?
24. In the following separate mini cases, using a periodic inventory system, identify the item(s) designated by letter.
(a) Purchases -X- Y= Net purchases.
(b) Cost of goods purchased - Net purchases = X.
(c) Beginning inventory + X = Cost of goods available for sale.
(d) Cost of goods available for sale - Cost of goods sold = X.
29. Brim Hat Shop received a shipment of hats for which it paid the wholesaler $2,940. The price of the hats was
$3,000 but Brim was given a $60 cash discount and required to pay freight charges of $80. In addition, Brim paid $130 to cover the travel expenses of an employee who negotiated the purchase of the hats. What amount will Brim record for inventory? Why?
This solution discusses steps in the accounting cycle, costs of goods sold, and various other inventory questions.