The following information is available for a company:
| Beginning inventory | $ 45,000 |
| Inventory purchases (on account) | 175,000 |
| Freight charges on purchases (paid in cash) | 30,000 |
| Inventory returned to suppliers (for credit) | 32,000 |
| Ending inventory | 50,000 |
| Sales (on account) | 270,000 |
| Cost of inventory sold | 168,000 |
Required:
Applying both a perpetual and a periodic inventory system, prepare the journal entries that summarize the transactions that created these balances. Include all end-of-period adjusting entries indicated.
The Kwik Company’s inventory balance on December 31, 2024, was $200,000 (based on a 12/31/2024 physical count) before considering the following transactions:
- Goods shipped to Kwik f.o.b. destination on December 20, 2024, were received on January 4, 2025. The invoice cost was $37,000.
- Goods shipped to Kwik f.o.b. shipping point on December 28, 2024, were received on January 5, 2025. The invoice cost was $24,000.
- Goods shipped from Kwik to a customer f.o.b. destination on December 27, 2024, were received by the customer on January 3, 2025. The sales price was $47,000 and the inventory cost $29,000.
- Goods shipped from Kwik to a customer f.o.b. destination on December 26, 2024, were received by the customer on December 30, 2024. The sales price was $27,000 and the inventory cost $20,000.
- Goods shipped from Kwik to a customer f.o.b. shipping point on December 28, 2024, were received by the customer on January 4, 2025. The sales price was $32,000 and the inventory cost $19,000.
Required:
Determine the correct inventory amount to be reported in Kwik’s 2024 balance sheet.
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Comfort Company purchased 170 units of inventory on November 17, 2024. The units have a list price of $600 each, but Comfort was given a 20% trade discount. The terms of the sale were 310/310 , n30/n30 . Comfort uses a perpetual inventory system.
Required:
- Prepare the journal entries to record the (a) purchase by Comfort on November 17 and (b) payment on November 26, 2024. Comfort uses the gross method of accounting for purchase discounts.
- Prepare the journal entry for the payment, assuming instead that it was made on December 15, 2024.
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Comfort Company purchased 170 units of inventory on November 17, 2024. The units have a list price of $600 each, but Comfort was given a 20% trade discount. The terms of the sale were 310/310 , n30/n30 . Comfort uses a perpetual inventory system.
- Prepare the journal entries to record the (a) purchase by Comfort on November 17 and payment on November 26, 2024, and (b) December 15, 2024 using the net method of accounting for purchase discounts.
Altira Corporation provides the following information related to its inventory during the month of August 2024:
| August 1 | Inventory on hand—3,400 units; cost $6.00 each. |
| August 8 | Purchased 13,600 units for $6.20 each. |
| August 14 | Sold 10,200 units for $12.70 each. |
| August 18 | Purchased 10,200 units for $6.30 each. |
| August 25 | Sold 11,900 units for $11.70 each. |
| August 28 | Purchased 6,800 units for $6.50 each. |
| August 31 | Inventory on hand—11,900 units. |
Required:
Using calculations based on a periodic inventory system, determine the inventory balance Altira would report in its August 31, 2024, balance sheet and the cost of goods sold it would report in its August 2024 income statement using each of the following cost flow methods.
Altira Corporation provides the following information related to its inventory during the month of August 2024:
| August 1 | Inventory on hand—3,400 units; cost $6.00 each. |
| August 8 | Purchased 13,600 units for $6.20 each. |
| August 14 | Sold 10,200 units for $12.70 each. |
| August 18 | Purchased 10,200 units for $6.30 each. |
| August 25 | Sold 11,900 units for $11.70 each. |
| August 28 | Purchased 6,800 units for $6.50 each. |
| August 31 | Inventory on hand—11,900 units. |
Required:
Using calculations based on a periodic inventory system, determine the inventory balance Altira would report in its August 31, 2024, balance sheet and the cost of goods sold it would report in its August 2024 income statement using each of the following cost flow methods.
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Altira Corporation provides the following information related to its inventory during the month of August 2024:
| August 1 | Inventory on hand—3,500 units; cost $7.60 each. |
| August 8 | Purchased 17,500 units for $7.00 each. |
| August 14 | Sold 14,000 units for $13.50 each. |
| August 18 | Purchased 10,500 units for $6.80 each. |
| August 25 | Sold 13,000 units for $12.50 each. |
| August 28 | Purchased 5,500 units for $5.80 each. |
| August 31 | Inventory on hand—10,000 units. |
Required:
- Using calculations based on a perpetual inventory system, determine the inventory balance Altira would report in its August 31, 2024, balance sheet and the cost of goods sold it would report in its August 2024 income statement using the FIFO method.
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Altira Corporation provides the following information related to its inventory during the month of August 2024:
| August 1 | Inventory on hand—3,500 units; cost $7.60 each. |
| August 8 | Purchased 17,500 units for $7.00 each. |
| August 14 | Sold 14,000 units for $13.50 each. |
| August 18 | Purchased 10,500 units for $6.80 each. |
| August 25 | Sold 13,000 units for $12.50 each. |
| August 28 | Purchased 5,500 units for $5.80 each. |
| August 31 | Inventory on hand—10,000 units. |
- Using calculations based on a perpetual inventory system, determine the inventory balance Altira would report in its August 31, 2024, balance sheet and the cost of goods sold it would report in its August 2024 income statement using the Average cost method.
Note: Round “Average Cost per Unit” to 2 decimal places.
Altira Corporation provides the following information related to its inventory during the month of August 2024:
| August 1 | Inventory on hand—2,300 units; cost $6.40 each. |
| August 8 | Purchased 11,500 units for $5.80 each. |
| August 14 | Sold 9,200 units for $12.30 each. |
| August 18 | Purchased 6,900 units for $5.00 each. |
| August 25 | Sold 8,200 units for $11.30 each. |
| August 28 | Purchased 4,300 units for $5.80 each. |
| August 31 | Inventory on hand—7,600 units. |
Using calculations based on a perpetual inventory system, determine the inventory balance Altira would report in its August 31, 2024, balance sheet and the cost of goods sold it would report in its August 2024 income statement using last-in, first-out (LIFO).
The MegaMart Company began 2024 with inventory of 24,000 units at a cost of $7 per unit. During 2024, 64,000 units were purchased for $8.50 each. Sales for the year totaled 75,000 units leaving 13,000 units on hand at the end of 2024. MegaMart uses a periodic inventory system and the LIFO inventory cost method.
Required:
- Calculate cost of goods sold for 2024.
- Calculate the effect of the use of LIFO on Income.