Chapter 5: Q5-3RQ (page 294)
Describe the operating cycle of a merchandiser.
The term operating cycle of a merchandiser refers to the process which includes the purchase of inventory, sale of the same, and collection of cash.
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What account is debited when recording a purchase of inventory when using the perpetual inventory system?
Comparing periodic and perpetual inventory systems
For each statement below, identify whether the statement applies to the periodic inventory system, the perpetual inventory system, or both.
a. Normally used for relatively inexpensive goods.
b. Keeps a running computerized record of merchandise inventory.
c. Achieves better control over merchandise inventory.
d. Requires a physical count of inventory to determine the quantities on hand.
e. Uses bar codes to keep up-to-the-minute records of inventory.
Describe the calculation of cost of goods sold when using the periodic inventory system.
Journalize the following transactions that occurred in March 2018 for Double Company. Assume Double uses the periodic inventory system. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Double estimates sales returns at the end of each month.
Mar. 3 Purchased merchandise inventory on account from Sidecki Wholesalers, \(5,500. Terms 2/15, n/EOM, FOB shipping point.
4 Paid freight bill of \)70 on March 3 purchase.
4 Purchased merchandise inventory for cash of \(1,100.
6 Returned \)900 of inventory from March 3 purchase.
8 Sold merchandise inventory to Herrick Company, \(3,400, on account. Terms 1/15, n/35.
9 Purchased merchandise inventory on account from Tex Wholesalers, \)5,600. Terms 2/10, n/30, FOB destination.
10 Made payment to Sidecki Wholesalers for goods purchased on March 3, less return and discount.
12 Received payment from Herrick Company, less discount.
13 After negotiations, received a \(500 allowance from Tex Wholesalers.
15 Sold merchandise inventory to Jesper Company, \)1,700, on account. Terms n/EOM.
22 Made payment, less allowance, to Tex Wholesalers for goods purchased on March 9.
23 Jesper Company returned \(300 of the merchandise sold on March 15.
25 Sold merchandise inventory to Salter for \)1,000 on account. Terms of 1/10, n/30 was offered, FOB shipping point.
29 Received payment from Salter, less discount.
30 Received payment from Jesper Company, less return.
Click Computers has the following transactions in July related to the sale of merchandise inventory.
July 12 Sold computers on account for \(8,000 to a customer, terms 3/15, n/30. The cost of the computers is \)4,800. Click uses the gross method for recording sales revenue.
26 Received payment from the customer on balance due.
Journalize the sales transactions for Click Computers assuming the company uses the perpetual inventory system.
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