Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
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Chapter 6, Problem 1C
To determine
Explain the advantages and disadvantage of periodic inventory system and perpetual inventory system.
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Umatilla Bank and Trust is considering giving Whispering Winds Corp. a loan. Before doing so, it decides that further discussions with
Whispering Winds's accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end
balance of $300,800. Discussions with the accountant reveal the following.
1.
2.
3.
4.
5.
Whispering Winds shipped goods costing $44,300 to Hemlock Company FOB shipping point on December 28. The goods are
not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were
not in the warehouse.
The physical count of the inventory did not include goods costing $93.500 that were shipped to Whispering Winds FOB
destination on December 27 and were still in transit at year-end.
Whispering Winds received goods costing $22.500 on January 2. The goods were shipped FOB shipping point on December
26 by Yanice Co. The goods were not included in the physical count.
Whispering Winds shipped…
Tri-State Bank and Trust is considering giving Crane Company a loan. Before doing so, management decides that further discussions with
Crane's accountant may be desirable. One area of particular concern is the inventory account, which has a year-end balance of $290,000.
Discussions with the accountant reveal the following.
1.
2.
3.
4.
5.
Crane shipped goods costing $34,000 to Lilja Company, FOB shipping point, on December 28. The goods are not expected to
arrive at Lilja until January 12. The goods were not included in the physical inventory because they were not in the warehouse.
The physical count of the inventory did not include goods costing $91,000 that were shipped to Crane FOB destination on
December 27 and were still in transit at year-end.
Crane received goods costing $22,000 on January 2. The goods were shipped FOB shipping point on December 26 by Brent Co.
The goods were not included in the physical count.
Crane shipped goods costing $33,000 to Jesse Co., FOB destination, on…
Tri-State Bank and Trust is considering giving Swifty Company a loan. Before doing so, management decides that further discussions
with Swifty's accountant may be desirable. One area of particular concern is the inventory account, which has a year-end balance of
$310,000. Discussions with the accountant reveal the following.
1.
2.
3.
4.
5.
Swifty shipped goods costing $36,000 to Lilja Company, FOB shipping point, on December 28. The goods are not expected to
arrive at Lilja until January 12. The goods were not included in the physical inventory because they were not in the
warehouse.
The physical count of the inventory did not include goods costing $92,000 that were shipped to Swifty FOB destination on
December 27 and were still in transit at year-end.
Swifty received goods costing $20,000 on January 2. The goods were shipped FOB shipping point on December 26 by Brent
Co. The goods were not included in the physical count.
Swifty shipped goods costing $35,000 to Jesse Co., FOB…
Chapter 6 Solutions
Principles of Accounting
Ch. 6 - Prob. 1DQCh. 6 - Prob. 2DQCh. 6 - Prob. 3DQCh. 6 - Assume a large shipment of uninsured merchandise...Ch. 6 - Prob. 5DQCh. 6 - Prob. 6DQCh. 6 - Prob. 7DQCh. 6 - Indicate whether each of the statements that...Ch. 6 - Prob. 2SECh. 6 - Prob. 3SE
Ch. 6 - Prob. 4SECh. 6 - Prob. 5SECh. 6 - Prob. 6SECh. 6 - Prob. 7SECh. 6 - Prob. 8SECh. 6 - Record the following transactions using T...Ch. 6 - Prob. 10SECh. 6 - Prob. 11SECh. 6 - Sutton Hills Companys management made the...Ch. 6 - Prob. 2EACh. 6 - A company has the following data: net sales,...Ch. 6 - Prob. 4EACh. 6 - Prob. 5EACh. 6 - Linear Company engaged in the following...Ch. 6 - Prob. 7EACh. 6 - Prob. 8EACh. 6 - Prob. 9EACh. 6 - Prob. 10EACh. 6 - Prob. 11EACh. 6 - Prob. 12EACh. 6 - Prob. 13EACh. 6 - Prob. 14EACh. 6 - Prob. 15EACh. 6 - Matuska Tools Corporations income statements...Ch. 6 - Selected accounts from Murrays Furniture Stores...Ch. 6 - Prob. 3PCh. 6 - Selected accounts from Dences Gourmet Shops...Ch. 6 - Prob. 5PCh. 6 - Teague Company engaged in the following...Ch. 6 - Prob. 7APCh. 6 - Prob. 8APCh. 6 - Prob. 9APCh. 6 - Prob. 10APCh. 6 - Prob. 11APCh. 6 - Prob. 12APCh. 6 - Prob. 1CCh. 6 - Prob. 2CCh. 6 - Prob. 3CCh. 6 - Prob. 4CCh. 6 - Prob. 5CCh. 6 - Prob. 6C
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- The management of Bartleby Graduate Co. has engaged you to assist in the preparation of year-end (December 31) financial statements. You are told that on November 30, the correct inventory level was 145,730 units. During the month of December, sales totaled 138,630 units including 40,000 units shipped on consignment to Course Hero Certification Corp. A letter received from Course Hero indicates that as of December 31, it has sold 11,000 units and was still trying to sell the remainder. A review of the December purchase orders to various suppliers shows the following. Bartleby Graduate Co. uses the "passing of legal title" for inventory recognition. Purchase Invoice Date Quantity in Date Shipped Date Received Terms Order Date Units 12/31/20 12/05/20 12/06/20 12/18/20 12/22/20 01/02/21 01/02/21 01/03/21 12/20/20 01/05/21 01/07/21 01/02/21 12/17/20 01/05/21 12/29/20 01/04/21 4,200 01/05/21 12/22/20 01/07/21 01/02/21 01/06/21 01/07/21 FOB Destination 3,600 FOB Destination FOB Shipping…arrow_forwardBAYWEST Stationery & Supplies located in Montego Bay, Jamaica, sells a variety of school supplies including several brands of tablets. The business uses a perpetual inventory system and adjusts cost of goods sold for any shortage or excess inventory. BAYWEST began the third quarter (July to September) of 2020 with 30 (Alcatel) tablets at a total cost of $187,800. During the quarter, with the onset of the COVID-19 pandemic, the business completed the following transactions relating to the “Alcatel” tablets. July 8 : 98 tablets were purchased at a cost of $6,202 each. In addition, the business paid a freight charge of $248 cash on each tablet to have the inventory shipped from the point of purchase to their warehouse. July 31: The sales for July were 85 tablets which yielded total sales revenue of $809,030. (25 of these tablets were sold on account to longstanding customers) August 4: A new batch of 67 tablets was purchased at a total cost of $465,650…arrow_forwardBAYWEST Stationery & Supplies located in Montego Bay, Jamaica, sells a variety of school supplies including several brands of tablets. The business uses a perpetual inventory system and adjusts cost of goods sold for any shortage or excess inventory. BAYWEST began the third quarter (July to September) of 2020 with 30 (Alcatel) tablets at a total cost of $187,800. During the quarter, with the onset of the COVID-19 pandemic, the business completed the following transactions relating to the “Alcatel” tablets. July 8: 98 tablets were purchased at a cost of $6,202 each. In addition, the business paid a freight charge of $248 cash on each tablet to have the inventory shipped from the point of purchase to their warehouse. July 31: The sales for July were 85 tablets which yielded total sales revenue of $809,030. (25 of these tablets were sold on account to longstanding customers) August 4: A new batch of 67 tablets was purchased at a total cost of $465,650 August 10: 5 of the tablets…arrow_forward
- BAYWEST Stationery & Supplies located in Montego Bay, Jamaica, sells a variety of school supplies including several brands of tablets. The business uses a perpetual inventory system and adjusts cost of goods sold for any shortage or excess inventory. BAYWEST began the third quarter (July to September) of 2020 with 30 (Alcatel) tablets at a total cost of $187,800. During the quarter, with the onset of the COVID-19 pandemic, the business completed the following transactions relating to the “Alcatel” tablets. July 8: 98 tablets were purchased at a cost of $6,202 each. In addition, the business paid a freight charge of $248 cash on each tablet to have the inventory shipped from the point of purchase to their warehouse. July 31: The sales for July were 85 tablets which yielded total sales revenue of $809,030. (25 of these tablets were sold on account to longstanding customers) August 4: A new batch of 67 tablets was purchased at a total cost of $465,650 August 10: 5 of the tablets…arrow_forwardBAYWEST Stationery & Supplies located in Montego Bay, Jamaica, sells a variety of school supplies including several brands of tablets. The business uses a perpetual inventory system and adjusts cost of goods sold for any shortage or excess inventory. BAYWEST began the third quarter (July to September) of 2020 with 30 (Alcatel) tablets at a total cost of $187,800. During the quarter, with the onset of the COVID-19 pandemic, the business completed the following transactions relating to the “Alcatel” tablets July 8 98 tablets were purchased at a cost of $6,202 each. In addition, the business paid a freight charge of $248 cash on each tablet to have the inventory shipped from the point of purchase to their warehouse July 31 The sales for July were 85 tablets which yielded total sales revenue of $809,030. (25 of these tablets were sold on account to longstanding customers) August 4 A new batch of 67 tablets was purchased at a total cost of $465,650 August 10 5 of…arrow_forwardBAYWEST Stationery & Supplies located in Montego Bay, Jamaica, sells a variety of school supplies including several brands of tablets. The business uses a perpetual inventory system and adjusts cost of goods sold for any shortage or excess inventory. BAYWEST began the third quarter (July to September) of 2020 with 30 (Alcatel) tablets at a total cost of $187,800. During the quarter, with the onset of the COVID-19 pandemic, the business completed the following transactions relating to the “Alcatel” tablets. July 8: 98 tablets were purchased at a cost of $6,202 each. In addition, the business paid a freight charge of $248 cash on each tablet to have the inventory shipped from the point of purchase to their warehouse. July 31: The sales for July were 85 tablets which yielded total sales revenue of $809,030. (25 of these tablets were sold on account to longstanding customers) August 4: A new batch of 67 tablets was purchased at a total cost of $465,650 August 10: 5 of the tablets…arrow_forward
- BAYWEST Stationery & Supplies located in Montego Bay, Jamaica, sells a variety of school supplies including several brands of tablets. The business uses a perpetual inventory system and adjusts cost of goods sold for any shortage or excess inventory. BAYWEST began the third quarter (July to September) of 2020 with 30 (Alcatel) tablets at a total cost of $187,800. During the quarter, with the onset of the COVID-19 pandemic, the business completed the following transactions relating to the “Alcatel” tablets. July 8 98 tablets were purchased at a cost of $6,202 each. In addition, the business paid a freight charge of $248 cash on each tablet to have the inventory shipped from the point of purchase to their warehouse.July 31 The sales for July were 85 tablets which yielded total sales revenue of $809,030. (25 of these tablets were sold on account to longstanding customers)August 4 A new batch of 67 tablets was purchased at a total cost of $465,650August 10 5 of the tablets…arrow_forwardBAYWEST Stationery & Supplies located in Montego Bay, Jamaica, sells a variety of school supplies including several brands of tablets. The business uses a perpetual inventory system and adjusts cost of goods sold for any shortage or excess inventory. BAYWEST began the third quarter (July to September) of 2020 with 30 (Alcatel) tablets at a total cost of $187,800. During the quarter, with the onset of the COVID-19 pandemic, the business completed the following transactions relating to the “Alcatel” tablets. Subpart (D) to be solved July 31 - The sales for July were 85 tablets which yielded total sales revenue of $809,030. (25 of these tablets were sold on account to longstanding customers) August 4 - A new batch of 67 tablets was purchased at a total cost of $465,650 August 10 - 5 of the tablets purchased on August 4 were returned to the supplier, as they were not of the model ordered. August 31 - During the month 60 tablets were sold at a price of $10,350 each. September 4 -…arrow_forwardA CPA’s client, Boos & Baumkirchner, Inc., is a medium-sizemanufacturer of products for the leisure-time activities market (camping equipment,scuba gear, bows and arrows, and so forth). During the past year, a computer system wasinstalled and inventory records of finished goods and parts were converted to computerprocessing. The inventory master file is maintained on a disk. Each record of the filecontains the following information:• Item or part number • Total value of inventory on hand at cost• Description • Date of last sale or usage• Size • Quantity used or sold this year• Unit-of-measure code • Economic order quantity• Quantity on hand • Code number of major vendor• Cost per unit • Code number of secondary vendorIn preparation for year-end inventory, the client has two identical sets of preprintedinventory count cards. One set is for the client’s inventory counts, and the other is for theCPA’s use to make audit test counts. The following information is on each card:• Item or…arrow_forward
- BAYWEST Stationery & Supplies located in Montego Bay, Jamaica, sells a variety of school supplies including several brands of tablets. The business uses a perpetual inventory system and adjusts cost of goods sold for any shortage or excess inventory. BAYWEST began the third quarter (July to September) of 2020 with 30 (Alcatel) tablets at a total cost of $187,800. During the quarter, with the onset of the COVID-19 pandemic, the business completed the following transactions relating to the “Alcatel” tablets. July 8 - 98 tablets were purchased at a cost of $6,202 each. In addition, the business paid a freight charge of $248 cash on each tablet to have the inventory shipped from the point of purchase to their warehouse. July 31 - The sales for July were 85 tablets which yielded total sales revenue of $809,030. (25 of these tablets were sold on account to longstanding customers) August 4 - A new batch of 67 tablets was purchased at a total cost of $465,650 August 10 - 5 of the…arrow_forwardWares king supplies custom-fitted curtains and blinds to retail customers. It has recently expanded to offer a wide variety of home decorating products through its six stores across the state. After some initial problems with stock control it installed a new automated inventory system in April this year. The system replaced another automated system that had been modified so often over the years that the auditor had advised Wares’s management that they did not regard it as reliable. That is, the auditor was unable to rely on the old system sufficiently to assess control risk for inventory as anything less than high.Required:a) Explain the normal process an auditor would expect to find in the client’s systems governing changes to computer programs. Why is an auditor concerned about program changes? b) Wares kings’ financial year-end is 31 December. Does the auditor need to obtain evidence about the performance of the inventory control system from every month in the year or from a sample…arrow_forwardWares king supplies custom-fitted curtains and blinds to retail customers. It has recently expanded to offer a wide variety of home decorating products through its six stores across the state. After some initial problems with stock control it installed a new automated inventory system in April this year. The system replaced another automated system that had been modified so often over the years that the auditor had advised Wares’s management that they did not regard it as reliable. That is, the auditor was unable to rely on the old system sufficiently to assess control risk for inventory as anything less than high. Required: Explain the normal process an auditor would expect to find in the client’s systems governing changes to computer programs. Why is an auditor concerned about program changes? Wares kings’ financial year-end is 31 December. Does the auditor need to obtain evidence about the performance of the inventory control system from every month in the year or from a sample…arrow_forward
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