Describe the calculation of the cost of goods sold when using the periodic inventory system.

Q: What is the formula used to determine the amount of merchandise inventory to be purchased?

A: To calculate amount of merchandise inventory to be purchased, we need opening inventory amount,…

Q: Refer to the information in Exercise 6-7 and assume the periodic inventory system is used. Determine…

A: Introduction: FIFO: FIFO stands for First in First out  Which is used in valuating inventory.

Q: In the Perpetual/Periodic Inventory System what are the merchandise inventory and Income summary?…

A: Perpetual inventory: Under perpetual inventory system each transaction for purchase of inventory,…

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

A: Perpetual inventory system: Perpetual Inventory System refers to the inventory system that maintains…

Q: By following the LIFO process calculate the Ending inventory value.

A: Introduction: LIFO: LIFO stands for Last in First out. Which means last received inventory to be…

Q: What is inventory shrinkage? Describe the adjusting entry that would be recorded to account for…

A: Inventory shrinkage: When there is a difference between inventory as per books and actual inventory…

Q: Cost of goods sold is computed from the following equation: beginning inventory - cost of goods…

A: Gross profit = Sales - Cost of goods sold  Sales = Cost of goods sold  + Gross profit  Cost of goods…

Q: Maxell Company uses the FIFO method to assign costs to inventory and cost of goods sold. The company…

A: Periodic inventory is a system of inventory valuation where the business’s inventory and cost of…

Q: What account is debited when recording a purchase of inventory when using the perpetual inventory…

A: Perpetual inventory system: The method or system of maintaining, recording, and adjusting the…

Q: Record the end of period adjustment to determine the amount of cost of goods sold, including any…

A: The adjustment entry is to be made under periodic inventory system at year end to record cost of…

Q: Discuss and explain the major uses of the gross profit method of inventory estimation.

A: Generally  we get gross profit  after trading a/c prepared it means after net sales  minus net…

Q: Determine the goods and costs included in inventory.

A: The cost included in inventory includes all the costs incurred to prepare such inventory for sale.…

Q: Determine ending inventory using the dollar-value LIFO inventory method.

A: Dollar-value LIFO method: In this method, the valuation of inventory is calculated on the monetary…

Q: How can we prepare financial statements for a company using periodic inventory system?

A: To calculate or account inventory there is two method, perpetual and periodic inventory method. In…

Q: Cost of goods sold is debited each time a sale is made under which of the following inventory…

A: The carrying value of the goods that are sold during a given period of time are termed as cost of…

Q: What account is debited when recording the payment of freight in when using the periodic inventory…

A: Definition:

Q: Which of the following measures the length of time it takes to acquire, sell, and replace inventory?…

A: Numbers of days to sell inventory: This ratio is determined as the number of days a particular…

Q: What is the name of the account used to record purchases of merchandise inventory?

A: The concept of merchandise inventory is associated with cost of goods that is in hand and available…

Q: Explain how a periodic inventory system operates.

A: Inventory: It can be defined as all the goods, items, materials, and merchandise that are held by a…

Q: Determine ending inventory by applying the retail inventory method.

A: Retail inventory method: It takes into account all the retail amounts that is, the current selling…

Q: FIFO method find Cost of goods sold and Ending inventory values.

A: Formula: FIFO : FIFO stands for First in First out. Which means first received inventory to be sold…

Q: Describe a  Comparison of the Perpetual and Periodic Inventory Systems

A:

Q: Compute the cost of the ending inventory and the cost of goods sold under FIFÓ, LIFÓ, and…

A:

Q: The two main inventory accounting systems are the Perpetual and periodic. purchase and sale.…

A: Merchandise Inventory: Merchandise is the stock of goods bought by a wholesaler, or a retailer, or a…

Q: Define the term inventory shrinkage. How is the amount of inventory shrinkage determined in a…

A: Inventory Shrinkage refers to that amount of inventory which is in excess and listed in the…

Q: When recording purchase returns and purchase allowances under the periodic inventory system, what…

A: Periodic Inventory System:Periodic inventory system is a system in which the inventory is updated…

Q: Explain the types of inventory and the differences between a perpetual inventory system and a…

A:

Q: Assuming that a perpetual inventory system is used, determine the cost of goods sold and the ending…

A: Inventory valuation refers to the methods used by the company to determine the value of its…

Q: Required: Compute the cost of the ending inventory and the cost of goods sold under FIFO Method.

A: Given:              Opening Inventory 200 units @ $5              Purchase 300 Units @ $6…

Q: Describe the journal entry(ies) when recording a sale of inventory using the periodic inventory…

A: In a periodic Inventory system, the entries are made in the system at the end of the accounting…

Q: The cost of goods available for sale is allocated between * beginning inventory and ending…

A: Gross profit = Sales - Cost of goods sold  Sales = Cost of goods sold  + Gross profit  Cost of goods…

Q: What account is debited when recording a purchase of inventory when using a periodic inventory…

A: Periodic inventory system: The method or system of recording the transactions related to inventory…

Q: Explain how to estimate the average cost of inventory when using the retail inventory method.

A: Retail inventory method: It takes into account all the retail amounts that is, the current selling…

Q: Describe the journal entries when recording a sale of inventory using the periodic inventory system.

A: Definition:

Q: How do i calculate ending inventory and cost of goods sold using LIFO?

A: LIFO stands for last-in-first-out, in this method, goods which are produced at last are assumed to…

Q: Under this inventory system, the “Inventory” account is updated each time a purchase or sale is…

A: Solution: Under perpetual inventory system, inventory is updated with every purchase and sale. Cost…

Q: why both the "beginning inventory" and "ending inventory" figures both appear on the Income…

A: Periodic inventory system is a inventory system in which all purchase and sale transactions related…

Q: under the system the ending inventory and cost of goods sold are determined at the end of the…

A: Inventory in the business can be maintained through perpetual inventory system or periodic inventory…

Q: Using LIFO method, determine cost of goods sold (COGS) and ending inventory (S).

A: C) Calculation of Cost of goods sold & ending inventory using LIFO: 127 units sold on April 15…

Q: In the periodic inventory system, all purchases of merchandise during the period is recorded on what…

A: There are two type of inventory systems in the business. One is perpetual inventory system and other…

Q: Describe the recording process for purchases of merchandise inventory using a Perpetual inventory…

A: Under perpetual inventory system, changes in merchandise inventory account are recorded after each…

Q: Discuss how discounts are recorded in a perpetual inventory system, and compare how discounts are…

A: There are two methods to determine the inventory of the company purchased. 1. Perpetual inventory…

Q: What are the two journal entries involved when recording the sale of inventory when using the…

A: Perpetual inventory system refers to the inventory system that maintains the detailed records of…

Q: Determine cost of goods sold during the period under a periodic inventory system using the LIFO…

A: LIFO - last in first out. Means the goods at last will be sold first. Under periodic LIFO the…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.