Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 5, Problem 1ATC
a.
To determine
Determine the percentage of Corporation T’s total assets that is comprised of inventory.
b.
To determine
Identify the cost flow method used by Corporation T to account for its inventory.
c.
To determine
Corporation T had arrangements with some of its vendors such that it does not purchase or pay for merchandise inventory until the merchandise is sold to outside customers. Identify and explain whether cost of these goods ever included in the Inventory account.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Required:a. Complete a subsidiary ledger record for the computer using each of the three inventory valuation methods listed below
1. Average cost.2. FIFO.3. LIFO.
Your inventory records should show both purchases of this product, the sale on Mar 31, and the balance on hand on Mar 31, 2020.
b. Which of the three cost flow assumptions will result in reporting the lowest net income for the current year? Explain
You are examining the financial statements of France Company for the year ended
December 31, 2022. It uses the physical inventory system of accounting for inventory.
During your examination, you discovered that the 2023 sales of P 120,000 were
recorded in 2022; goods were excluded in the 2022 ending inventory at a cost of
70,000.
Based on the foregoing, answer the following questions:
Question 1: Which of the following accounts is(are) overstated by P 120,000 at the
end of year 2022 as a result of the error?
Select 1
sales Onlv
a. Sales and Accounts Receivable
b. Inventory, December 31, 2022 only
c. Retained Earnings only
Question 2: Which of the following accounts is (are) understated by p 70,000 at the
end of year 2022 as a result of the error?
Select 1
a. retained earnings
b. inventory, december 31,2022
c. sales and accounts receivable
d. sales and retained earnings
Below is the net income of New Girl Instrument AG, a private company, computed under the two inventory methods using a periodic system.
FIFO
Average-Cost
2017
$26,000
$23,000
2018
30,000
25,000
2019
29,000
27,000
2020
34,000
30,000
(ignore tax considerations)
Required:
a. Assume that in 2020 New Girl decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2020, and show net income reported for 2017, 2018, 2019, and 2020.
b. Assume that in 2020 New Girl, which had been using the average-cost method since beginning operations in 2017, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2020, and show net income reported for 2017, 2018, 2019, and 2020.
Chapter 5 Solutions
Survey Of Accounting
Ch. 5 - 1. What is the difference between accounts...Ch. 5 - Prob. 2QCh. 5 - 3. What type of account is the Allowance for...Ch. 5 - 4. What are two ways in which estimating...Ch. 5 - 5. When using the allowance method, why is...Ch. 5 - 6. What is the most common format for reporting...Ch. 5 - 7. Why is it necessary to mate an entry to...Ch. 5 - 8. What are some factors considered in estimating...Ch. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - 14. What is an advantage of using the percent of...Ch. 5 - 15. What is aging of accounts receivable?Ch. 5 - Prob. 16QCh. 5 - Prob. 17QCh. 5 - Prob. 18QCh. 5 - 21. What is accrued interest?Ch. 5 - How does the accrual of interest revenue or...Ch. 5 - Prob. 21QCh. 5 - Prob. 22QCh. 5 - Prob. 23QCh. 5 - Prob. 24QCh. 5 - Prob. 25QCh. 5 - 26. What types of costs do businesses avoid when...Ch. 5 - 1. Name and describe the four cost flow methods...Ch. 5 - 2. What are some advantages and disadvantages of...Ch. 5 - Prob. 29QCh. 5 - Prob. 30QCh. 5 - 5. In an inflationary period, which inventory cost...Ch. 5 - 6. In an inflationary period, which inventory cost...Ch. 5 - 7. What is the difference between the flow of...Ch. 5 - Prob. 34QCh. 5 - Prob. 35QCh. 5 - Prob. 36QCh. 5 - Prob. 37QCh. 5 - Prob. 38QCh. 5 - Prob. 39QCh. 5 - Prob. 1ECh. 5 - Exercise 7-1A Analysis of financial statement...Ch. 5 - Prob. 3ECh. 5 - Effect of recognizing uncollectible accounts...Ch. 5 - Analyzing financial statement effects of...Ch. 5 - Effect of recovering a receivable previously...Ch. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Roth Service Co. experienced the following...Ch. 5 - Prob. 11ECh. 5 - On May 1, 2018, Benzs Sandwich Shop loaned 10,000...Ch. 5 - Prob. 13ECh. 5 - Prob. 14ECh. 5 - Luna Company accepted credit cards in payment for...Ch. 5 - Prob. 16ECh. 5 - Prob. 17ECh. 5 - Prob. 18ECh. 5 - Prob. 19ECh. 5 - The Shirt Shop had the following transactions for...Ch. 5 - Prob. 21ECh. 5 - Accounting for uncollectible accountstwo cycles...Ch. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Sage Inc. experienced the following transactions...Ch. 5 - The following transactions apply to Hooper Co. for...Ch. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - The following trial balance was prepared for Tile,...Ch. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 1ATCCh. 5 - Prob. 3ATCCh. 5 - Prob. 4ATCCh. 5 - Alonzo Saunders owns a small training services...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- The following data were extracted from the accounting records of Harkins Company for the year ended April 30, 2019: a. Prepare the cost of merchandise sold section of the income statement for the year ended April 30, 2019, using the periodic inventory system. b. Determine the gross profit to be reported on the income statement for the year ended April 30, 2019. c. Would gross profit be different if the perpetual inventory system was used instead of the periodic inventory system?arrow_forwardOlson Company adopted the dollar-value LIFO method for inventory valuation at the beginning of 2015. The following information about the inventory at the end of each year is available from Olsons records: Required: 1. Calculate the dollar-value LIFO inventory at the end of each year. 2. Prepare the appropriate disclosures for the 2021 annual report if Olson uses current cost internally and LIFO for financial reporting.arrow_forwardThe following data pertain to 2012 activities of Twisp Industries: Use your completed worksheet to determine the firms cost of goods sold for 2012. Remember to change the year in row 24 and to enter new beginning inventory balances. Save the 2012 file as MFG3. Print the worksheet when done. If sales and other expenses were identical in 2011 and 2012, during which year did Twisp earn more income? Why?arrow_forward
- You are examining the financial statements of France Company for the year ended December 31, 2022. It uses the physical inventory system of accounting for inventory. During your examination, you discovered that the goods received in December, 2022 at a cost of P 50,000 were recorded as purchases when paid in 2023. The goods were excluded from the 2022 ending inventory. Based on the foregoing, answer the following questions: Question 1: Which of the following accounts is(are) understated by P 50,000 at th end of year 2022 as a result of the error? , is(are) understated by P 50,000 at the | Select ] Select a. Purchases only b. Purchases and Inventory, December 31, 2022 c. Retained Earnings only d. Inventory , December 31. 2022 only Question 2: Which of the following accounts is(are) not affected by the error at the end of year 2022? [ Select] of the following accounts is(are) [ Select] a. Accounts Payable b. Retained Earnings c. Inventory, December 31, 2022 d. Purchases Question 3: Which…arrow_forwardREQUIRED:(a) Calculate the LCNRV using the “individual-item” approach.(b) Prepare the journal entries as at 31 December 2020 assuming that a loss method and the Allowance to Reduce Inventory to NRV Account is used to record the write down of the inventory.(c) Assume that as at 31 December 2020, the account of Allowance to Reduce Inventory to NRV had a credit balance of RM14,500. Determine the amount of the gain or loss that would be recorded due to the change in the Allowance to Reduce Inventory to NRV Account as in (b). Show the related journal entries.arrow_forwardFollowing are the selected transactions of Nehan’s Enterprise relating to inventory during 2014: Required: Calculate the ending inventory, cost of goods sold and net purchase under FIFO method.arrow_forward
- Required: (a) Compute (i) the cost of goods sold; (ii) gross profit; and (iii) the gross profit rate (in %) for the year 2021. Show workings. (b) Prepare two closing entries to create the Cost of Goods Sold account and update the Inventory account.arrow_forwardCruz Company uses LIFO for inventory costing and reports the following financial data. It also recomputed inventory and cost of sold using FIFO for comparison purposes. LIFO inventory LIFO cost of goods sold FIFO inventory FIFO cost of goods sold Current assets (using LIFO) Current assets (using FIFO) Current liabilities 1. Compute its current ratio, inventory turnover, and days' sales in inventory for Year 2 using (a) LIFO numbers and (b) FIFO number Current ratio Inventory turnover Days' sales in inventory Answer is not complete. (a) Compute its current ratio, inventory turnover, and days' sales in inventory for Year 2 using LIFO numbers. Current ratio Inventory turnover Days' sales in inventory Current ratio Inventory turnover Days' sales in inventory $ $ $ $ Year 2 $ 290 870 360 825 350 420 170 Numerator 1 Denominator 350.0 / $ $ 870.0 111.0 X $ $ $ Numerator 1 350.0 / (a) Compute its current ratio, inventory turnover, and days' sales in inventory for Year 2 using LIFO numbers.…arrow_forwardThe following are the inventories for the years 2019, 2020, and 2021 for Parry Company: 1. Assume the inventory that existed at the end of each year was sold in the subsequent year. Prepare journal entries to record ilie lower of cost or net realizable value for each of the following alternatives: a. allowance meiliod, perpetual inventory system b. direct meiliod, perpetual inventory system 2. Next Level Explain an)' differences in inventory valuation and income between the two meiliods.arrow_forward
- wer the following independent questions and show computations supporting your answers. 1. Assume that the company uses the FIFO method. The value of the ending inventory at December 31 is 2. Assume that the company uses the average cost method. The value of the ending inventory on Decemb $. 3. Assume that the company uses the LIFO method. The value of the ending inventory on December 31 isarrow_forwardRefer to the "Compare" page. Calculate the sum of cost of goods sold and ending inventory balances under each of the four inventory cost flow assumptions. Explain the results. 3. COGS plus ending inventory FIFO Spec. Ident. Wtd. Avg. LIFO COGS Ending Inv. Total Northgate Products Corp. sells gadgets and uses the perpetual inventory system. During the month of January 2019, the number of gadgets purchased and sold was as follows: Purchased Sold Balance in inventory Date Units Unit cost Total $ Units Unit cost Total $ Units Unit cost Total $ Jan. 1 200 $2 3 400 $3 8 400 $5 10 700 * 15 300 $7 20 300 ** 27 400 $7 Units were sold for the following amount:…arrow_forward7. Cost Flow (Single Transaction). VRL Enterprises uses the moving average method to determine the cost of its inventory. During August 2020, VRL recorded the following information pertaining to its inventory: Units Unit cost Total cost Balance, August 1 20,000 P10 P200,000 Sale, August 15 17,500 Purchase, August 22 10,000 P16 P160,000 What amount of inventory should VRL report in its August 31, 2020 statement of financial position?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY
Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License