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Inventory Systems and Calculating Revenues, Expenses, and In

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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.
Exercise 5-9
Fill in the blanks 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 \$ ? \$23,600
Cost of good sold
Merchandise inventory (beginning) 6,000 17,050 7,500 7,000 2,560
Total Cost of merchandise purchases 36,000 ? ? 32,000 5,600
Merchandise inventory (ending) ? (2,700) (9,000) (6,600) ?
Cost of goods sold 34,050 15,900 ? ? 5,600
Gross profit ? ? 3,750 45,600 ?
Expenses 9,000 10,650 12,150 2,600 6,000
Net income (loss) \$ ? \$15,950 \$(8,400) \$43,000 \$ ?

Exercise 5-13

Journalize the following merchandising transactions for CSI Systems assuming it uses (a) a periodic inventory system and (b) a perpetual inventory system.

1. On November 1, CSI Systems purchases merchandise for \$1,400 on credit with terms of 2_5, n_30, FOB shipping point; invoice dated November 1.

2. On November 5, CSI Systems pays cash for the November 1 purchase.

3. On November 7, CSI Systems discovers and returns \$100 of defective merchandise purchased on November 1 for a cash refund.

4. On November 10, CSI Systems pays \$80 cash for transportation costs with the November 1 purchase.

5. On November 13, CSI Systems sells merchandise for \$1,500 on credit. The cost of the merchandise is \$750.

6. On November 16, the customer returns merchandise from the November 13 transaction. The returned items sell for \$200 and cost \$100.

Solution Preview

Identify whether each description best applies to a periodic or a perpetual inventory system.

a. Provides more timely information to managers.
Perpetual Inventory

b. Requires an adjusting entry to record inventory shrinkage.
Periodic Inventory

c. Markedly increased in frequency and popularity in business within the past decade.
Periodic Inventory

d. Records cost of goods sold each time a sales transaction occurs.
Perpetual Inventory
Exercise 5-9
Fill in the blanks 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 good 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 identify whether each description best applies to a periodic or a perpetual inventory system, fill in the blanks in the following separate income statements a through e, and journalize the following merchandising transactions for CSI Systems assuming it uses (a) a periodic inventory system and (b) a perpetual inventory system.

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