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5. When is cost of goods sold determined in a perpetual inventory
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
(d) Cost of goods available for sale _ Cost of goods
sold _ X.
25. "The key to successful business operations is effective inventory
management." Do you agree? Explain.
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?
5. When is cost of goods sold determined in a perpetual inventory system?
<br>In this system, detailed records of the cost of each inventory purchase and sale are maintained, the accounting records continuously - perpetually - show the quantity and cost of inventory that should be on hand at any time.
<br>Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.
<br>(a) X = Purchase returns and allowances
<br> Y = Purchases discounts
<br>(We need to subtract the gross purchases with any returns of unwanted goods, and the result is Net Purchases)
<br>(b) X = Freight-In
<br>(Freight charges are a necessary cost incurred to acquired inventory, freight-in is added to net purchases at arrive cost of goods purchased)
<br>(c) X = Cost of goods purchased
<br>(Add the cost of goods purchased to the cost of ...