Periodic Inventory - Purchasing Summary

In a periodic system, we must physically count the remaining inventory at the end of the period to calculate Cost of Goods Sold.

Concept: Periodic Inventory: Purchasing Summary

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Periodic Inventory - Purchasing Summary Additional Practice Problems

You are given the following information for Cainas Cookies:

Beginning inventory $200, Ending inventory $150

Purchase discounts $2

Sales discounts $5

Sales $385

Freight in $12

Purchases $125

Credit Card discounts $5

What is Cainas Cookies Cost of Goods Sold?

a. $175

b. $185

c. $156

d. $460

Watch Solution

ABC Company places an order with XYZ Company for $100 on 9/27/15, terms 2/10, n/30, FOB destination, and receives them on 9/30. What journal entry should ABC Company make on 9/30, assuming a periodic inventory system?

a. Debit: Inventory $100 and Credit: A/P $100

b. Debit: Purchases $100 and Credit: A/P $100

c. Debit: Inventory $98, Purchase Discounts $2 and Credit: A/P $100

d. Debit: Purchases $98, Purchase Discounts $2 and Credit: A/P $100

Watch Solution

Under the periodic inventory system:

a. a transaction by transaction unit inventory record is maintained.

b. the cost of goods sold for each sale is recorded at the time each sale is made.

c. ending inventory and cost of goods sold are calculated at the end of each accounting period.

d. a continuous inventory record provides the amount of ending inventory and the cost of goods sold throughout the period.

e. none of the above is correct.

Watch Solution

K Company sold inventory costing $1,400 on credit for the price of $2,000, with terms 2/10, n/30, FOB destination. The shipping cost of $100 was paid upon shipment of the goods. The buyer returned $250 of merchandise (retail price) prior to paying for the goods.

Required: If K Company uses a periodic inventory system:

d. What is the journal entry recorded for the sale?

e. What is the journal entry recorded for the shipping cost?

f. What is the journal entry recorded for the return?

Watch Solution

K Company purchased $5,800 of merchandise on credit, with terms 1/10, n/30, FOB shipping point. The shipping cost of $150 was paid upon receipt of the goods. $100 of merchandise was returned prior to paying for the goods.

Required: If K Company uses a periodic inventory system:

d. What is the journal entry recorded for the purchase?

e. What is the journal entry recorded for the shipping cost?

f. What is the journal entry recorded for the return?

Watch Solution

Merchandise is purchased on account from a supplier, List price $15,000, trade discount 40%, terms 2/10, n/30 FOB shipping point with transportation costs of $150 paid by the seller, and added to the invoice. The purchaser returned $1,000 of the merchandise prior to payment. The invoice was paid within the discount period.

Required: What is the amount of cash paid by the buyer?

Watch Solution

J Company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. The correct journal entry to record the merchandise return on July 7 is:

a. Debit Merchandise Inventory $200; credit Sales Returns $200.

b. Debit Accounts Payable $200; credit Merchandise Inventory $200.

c. Debit Merchandise Inventory $200; credit Sales $200.

d. Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600.

Watch Solution

During the period, Sales totaled $848,000, Purchases were $490,000 and Operating Expenses totaled $224,000. Beginning and ending inventory were $45,000 and $38,000, respectively. Calculate Cost of Goods Sold.

a) $497,000
b) $714,000
c) $721,000
d) $855,000

Watch Solution