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Periodic versus Perpetual Entries

#1 Please review illustration below (in attached file). Comparative Entries between these systems and state what the major difference is based on your observation.

(See attached file for data)

#2 On January 1, 2006, Phantom Company acquires $200,000 of Spiderman Products, Inc., 9% bonds at a price of $185,589. The interest is payable each December 31, and the bonds mature December 31, 2008. The investment will provide Phantom Company a 12% yield. The bonds are classified as held-to-maturity.

Prepare a three-year schedule of interest revenue and bond discount amortization, applying the effective-interest method.

#3 (Periodic versus Perpetual Entries) Fong Sai-Yuk Company sells one product. Presented below is information for January for Fong Sai-Yuk Company.

(See attached file for data)

Fong Sai-Yuk uses the FIFO cost flow assumption. All purchases and sales are on account.

Instructions
1. Assume Fong Sai-Yuk uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 110 units.
2. Assume Fong Sai-Yuk uses a perpetual system. Prepare all necessary journal entries.

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