Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 3, Problem 13E
Effect of shrinkage: Perpetual system
Ho Designs experienced the following events during 2018, its first year of operation:
1. Started the business when it acquired $70,000 cash from the issue of common stock.
2. Paid $41,000 cash to purchase inventory.
3. Sold inventory costing $37,500 for $56,200 cash.
4. Physically counted inventory showing $3,200 inventory was on hand at the end of the accounting period.
Required
a. Determine the amount of the difference between book balance and the actual amount of inventory as determined by the physical count.
b. Explain how differences between the book balance and the physical count of inventory could arise. Why is being able to determine whether differences exist useful to management?
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Topic: SINGLE-ENTRY BOOKKEEPING
BARUMBUM Company suspects that there is missing inventory in its warehouse at December 31, 2021. All sales and purchases were made on account. Also, the gross profit rate based on net sales is consistent every year. To aid in your investigation, you obtained the following:
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Can you help solve this & explain the answers. Thank you
Plum Corporation began the month of May with $900,000 of current assets, a current ratio of 2201, and an acid-test ratio of 1.30.1.
During the month, it completed the following transactions (the company uses a perpetual inventory system).
Hay 2 Purchased $75,000 of merchandise inventory on credit.
May 8 Sold merchandise inventory that cost $45,0e0 for $125,000 cash.
May 10 Collected $22,000 cash on an account receivable.
May 15 Paid $27,500 cash to settle an account payable.
May 17 Wrote off a $5,0e0 bad debt against the Alilowance for Doubtful Accounts account.
May 22 Declared a $1 per share cash dividend on its 68,000 shares of outstanding common stock.
May 26 Paid the dividend declared on May 22.
May 27 Borrowed $85,000 cash by giving the bank a 30-day, 10% note.
May 28 Borrowed $105,e00 cash by signing a long-tere secured note.
May 29 Used the $190,000 cash proceeds from the notes to buy new machinery.
Required:
Complete the…
Chapter 3 Solutions
Survey Of Accounting
Ch. 3 - 1. Define merchandise inventory. What types of...Ch. 3 - 2. What is the difference between a product cost...Ch. 3 - 3. How is the cost of goods available for sale...Ch. 3 - 4. What portion of cost of goods available for...Ch. 3 - 5. When are period costs expensed? When are...Ch. 3 - 6. If PetCo had net sales of 600,000, goods...Ch. 3 - Prob. 7QCh. 3 - 8. What are the effects of the following types of...Ch. 3 - 9. Northern Merchandising Company sold inventory...Ch. 3 - 10. If goods are shipped FOB shipping point, which...
Ch. 3 - 11. Define transportation-in. Is it a product or a...Ch. 3 - Prob. 12QCh. 3 - Prob. 13QCh. 3 - 14. Dyer Department Store purchased goods with the...Ch. 3 - 15. Eastern Discount Stores incurred a 5,000 cash...Ch. 3 - 16. What is the purpose of giving credit terms to...Ch. 3 - Prob. 17QCh. 3 - 18. Ball Co. purchased inventory with a list price...Ch. 3 - 22. Explain the difference between purchase...Ch. 3 - Prob. 20QCh. 3 - Prob. 21QCh. 3 - 25. What is the advantage of using common size...Ch. 3 - 27. What is the purpose of preparing a schedule of...Ch. 3 - 28. Explain how the periodic inventory system...Ch. 3 - Prob. 25QCh. 3 - Exercise 3-1 Determining the cost of financing...Ch. 3 - Exercise 3-2 Comparing a merchandising company...Ch. 3 - Exercise 3-3 Effect of inventory transactions on...Ch. 3 - Exercise 3-4 Effect of inventory transactions on...Ch. 3 - Exercise 3-5 Recording inventory transactions in a...Ch. 3 - Exercise 4-6A Understanding the freight terms FOB...Ch. 3 - Exercise 3-7 Effect of purchase returns and...Ch. 3 - Exercise 3-8 Accounting for product costs:...Ch. 3 - Effect of product cost and period cost: Horizontal...Ch. 3 - Cash Discounts and Purchase Returns On April 6,...Ch. 3 - Exercise 4-9A Determining the effect of inventory...Ch. 3 - Inventory financing costs Bill Norman comes to you...Ch. 3 - Effect of shrinkage: Perpetual system Ho Designs...Ch. 3 - Comparing gross margin and gain on sale of land...Ch. 3 - Single-step and multistep income statements The...Ch. 3 - Prob. 16ECh. 3 - Effect of cash discounts on financial statements:...Ch. 3 - Using common size statements and ratios to make...Ch. 3 - Prob. 19ECh. 3 - Determining cost of goods sold: Periodic system...Ch. 3 - Identifying product and period costs Required...Ch. 3 - Problem 4-23A Identifying freight costs Required...Ch. 3 - Effect of purchase returns and allowances and...Ch. 3 - Preparing a schedule of cost of goods sold and...Ch. 3 - Prob. 25PCh. 3 - Comprehensive cycle problem: Perpetual system At...Ch. 3 - Prob. 27PCh. 3 - Comprehensive cycle problem: Periodic system...Ch. 3 - Prob. 1ATCCh. 3 - ATC 3-2 Group Exercise Multistep income statement...Ch. 3 - Prob. 3ATCCh. 3 - Prob. 4ATC
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