Perpetual and Periodic Inventory Systems Required: 1. In a _________________ inv

Question

Perpetual and Periodic Inventory Systems

Required:

1. In a _________________ inventory system, every time goods are purchased and sold, the _________________ account is increased and decreased, respectively, and this account is updated continually. In a _________________ system, the _________________ account is not updated each time a purchase or sale is made. The Purchases, Purchase Discounts and Purchase Returns and Allowances accounts are temporary accounts shown on the _________________ , closed at the end of the period and used in the _________________ system.

2. Refer to the information in the table for Company A. What is the cost of inventory on hand at the end of the year and what is its cost of goods sold for the year?
_________________

3. Refer to the information in the table for Company B. What is its cost of goods sold for the year?

Explanation / Answer

. In a __perpetual inventory system__ inventory system, every time goods are purchased and sold, the __Inventory__ account is increased and decreased, respectively, and this account is updated continually. In a ___perpetual ___ system, the ___Periodic inventory System_____ account is not updated each time a purchase or sale is made. The Purchases, Purchase Discounts and Purchase Returns and Allowances accounts are temporary accounts shown on the __Lumpsum_______ , closed at the end of the period and used in the ________Periodic Inventory_________ system.

2. Refer to the information in the table for Company A. What is the cost of inventory on hand at the end of the year and what is its cost of goods sold for the year?
________________

Comoany A

Amount in $

Cost of Goods sold

38000

Inventory

18000

_

3. Refer to the information in the table for Company B. What is its cost of goods sold for the year?

Comoany B

Amount in $

Cost of Goods sold

27000

Inventory

9000

Working Notes for the above answer is as under

Purchase

41000

Less:

Purchase discounts

-4000

Purchase returns and allowance

-1000

Net Purchase

36000

Less: Inventory

-9000

Cost Of goods Sold

27000

Comoany A

Amount in $

Cost of Goods sold

38000

Inventory

18000

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.