under a periodic inventory system purchases are

UNDER A PERIODIC INVENTORY SYSTEM PURCHASES ARE FULL

On January 14, Racers received a shipment of Model AXVs with a purchase price of $14,700 and transportation costs of $400. On January 1, Racers had a beginning inventory of AXVs costing $28,600. Racers ATVs sells many makes and models of all terrain vehicles. Montez pays half the balance on May 10 and half on May 25.

UNDER A PERIODIC INVENTORY SYSTEM PURCHASES ARE FULL

Montez pays the full balance on May 10.

Montez pays the full balance on May 25.

Determine the amount Montez should pay under the following scenarios: Montez purchased 600 pounds of flour for $100 on May 1, under terms 2/10 n/30. The wholesaler offers purchase discounts for fast payment. Montez purchases a great deal of flour in bulk from a wholesaler. Montez Muffins and More is a bakery located in New York.

Determine the balance in ConnecTech’s ending inventory on January 31, 20X3.

Prepare the journal entry(ies) to record the sale of the computers.

Determine the balance in ConnecTech’s ending inventory on December 31, 20X2.

Prepare the journal entry(ies) to record ConnecTech’s purchase of the computers.

ConnecTech uses a perpetual inventory system. In January 20X3, ConnecTech sold 220 of the computers for $550 each. It paid $260 to have them delivered to its store. What journal entry should Romulus make if management believes the discrepancy is due to errors in the accounting process?ĬonnecTech bought 400 computers in December 20X2 for $300 each. An inventory count showed that only 2,875 were actually in ending inventory. At the end of the year, Romulus’s inventory account indicated that it had 2,900 maps of Italy on hand that had originally cost $30 each.

Lower-of-cost-or-market is an example of the conservatism principle.

It is possible for an item’s net realizable value to fall below its historical cost.

If the market value of an item exceeds its historical cost, it should be written up and a gain should be recorded.

If the replacement cost of an inventory item falls below its historical cost, the value of the item should be written down.

Which of the following concerning the “lower-of-cost-or-market” rule is not true? On which date should Raceway include the supplies in its inventory? The supplies actually shipped, FOB shipping point, on December 26 and arrived at Raceway’s receiving dock on January 2. The sales staff at Delta informed Raceway that the supplies would not be available to ship out until December 22 and Raceway accepted this arrangement. Raceway placed an order for supplies from Delta Inc. Raceway Corporation manufactures miniature cars and racetracks for collectors and enthusiasts. What was Crayson’s cost of goods sold for the year? At the end of the year, Crayson employees performed a physical count and determined that ending inventory amounted to $450,000. During the year, Crayson purchased an additional $1,060,000 in inventory. started the year with $490,000 in beginning inventory. North Carolina Furniture pays the invoice on February 21. On February 13, North Carolina Furniture purchases three sofas from a manufacturer for $300 each.

_ The “purchases” account is not used in a perpetual inventory system.

_ Companies only follow the “lower-of-cost-or-market” guideline if they use a periodic inventory system._ In a periodic system, cost of goods sold is the difference between what a company has available for sale (beginning inventory and purchases) and what they didn’t sell (ending inventory)._ Periodic inventory systems are, in general, less expensive to operate than perpetual systems._ Companies infrequently take advantage of purchase discounts because they amount to so little savings._ If inventory is shipped FOB shipping point, the buyer takes title as soon as the inventory leaves the seller’s warehouse._ In a perpetual system, but not a periodic system, cost of goods sold is determined and recorded at the time of sale._ A company that uses a perpetual inventory system should still perform a physical inventory count._ A company should include costs of transporting an item to its store when determining the cost of the item._ If the market value of a company’s inventory increases, the company should record a gain.

Under a periodic inventory system purchases are