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Inventory System and Calculating Revenues, Expense, and Inco

Inventory systems and Calculating revenues, Expense and income
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QS 5-8

Identify whether each description best applies to a periodic or a perpetual inventory system.
a. Provides more timely information to managers.
b. Requires an adjusting entry to record inventory shrinkage.
c. Markedly increased in frequency and popularity in business within the past decade.
d. Records cost of goods sold each time a sales transaction occurs.

Answer: D

Fill in the blank in the following separate income statements a through e. Identify any negative amount by putting it in parentheses.

a b c d e
Sales $60,000 $42,500 $36,000 $78,000 $23,600
Cost of goods sold
Merchandise inventory (beginning) 6,000 17,050 7,500 7,000 2,560
Total cost of merchandise purchases 36,000 1,550 33,750 32,000 5,600
Merchandise inventory (ending) (7,950) (2,700) (9,000) (6,600) (2,560)
Cost of goods sold 34,050 15,900 32,250 32,400 5,600
Gross ...

Solution Summary

This solution is comprised of a detailed explanation to calculate revenues, expense, and income.