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6 - 1 Inventories EXERCISES Ex. 190 The following information is available for Yancey Company: Beginning inventory600 units at $4First purchase900 units at $6Second purchase500 units at $7.20 Assume that Yancey uses a periodic inventory system and that there are 700 units left at the end of the month. InstructionsCompute the cost of ending inventory under the (a)FIFO.
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6 - 1 Inventories Ex. 194 Gray Company uses the periodic inventory system to account for inventories. Information related to Gray Company's inventory at October 31 is given below: October1Beginning inventory400units @ $9.80 =$ 3,920 8Purchase800units @ $10.40 =8,320 16Purchase600units @ $10.80 =6,480 24Purchase   200units @ $11.80 =      2,360 Total units and cost2,000units$21,080 Instructions 1.Show computations to value the.
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6 - 1 Inventories S-A E 231 Your former college roommate is opening a new retail store and asks you “Which inventory costing method should I use?” What is your response? Include a comparison of the tax effect, balance sheet effect, and income statement effect for FIFO versus LIFO. S-A E  232 Robert Tingle is studying.
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7 - 1 Accounting Information Systems Ex. 128 Reinsdorf Company uses both special journals and a general journal. The company accountant made the following errors during July. 1.Incorrectly added the credit entries in a customer's account in the accounts receivable subsidiary ledger. The total was listed as $2,690; it should have been $2,890. 2.A remittance.
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6 - 1 Inventories aEx. 214 The inventory of columbo Company was destroyed by fire on April 1. From an examination of the accounting records, the following data for the first three months of the year are obtained: Sales Revenue$185,000 Sales Returns and Allowances5,000 Purchases110,000 Freight-In3,500 Purchase Returns and Allowances4,000 Instructions Determine the merchandise lost by fire, assuming a beginning.
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6 - 1 Inventories aEx. 211 Norris Company uses the perpetual inventory system and had the following purchases and sales during March.         Purchases                    Sales       Units     Unit CostUnits     Selling Price/Unit 3/1Beginning inventory100$40 3/3Purchase60$50 3/4Sales70$80 3/10Purchase200$55 3/16Sales80$90 3/19Purchase40$60 3/25Sales120$90 Ex. 211(Cont.) Instructions Using the inventory and sales data above, calculate the value assigned to cost of goods sold in March and to the ending inventory at.
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7 - 1 Accounting Information Systems 92.An (x) below the "Other Accounts" column in a cash receipts journal indicates the a.total has been posted to the general ledger. b.total is not posted to the general ledger. c.column has been footed. d.column has been cross-footed. 93.Cross-footing a cash receipts journal means a.the equality of debits and credits in the.
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7 - 1 Accounting Information Systems 42.              The balance of a control account in the general ledger a.must always be zero. b.must equal the amount of total assets. c.is always greater than the composite balance of individual accounts in a related subsidiary ledger. d.must equal the composite balance of individual accounts in a related subsidiary ledger. 43.A.
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7 - 1 Accounting Information Systems TRUE-FALSE STATEMENTS 1.An accounting information system should be cost effective; that is, the benefits of the information must outweigh the cost of providing it. 2.An accounting system has flexibility if it is able to be used by many different companies at the same time. 3.General ledger accounting systems are.
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7 - 1 Accounting Information Systems COMPLETION STATEMENTS               139.The basic principles in the development of an accounting information system are (1)________________, (2)________________, and (3)_______________. 140.The accounts receivable ______________ provides detailed information about customer accounts which is summarized in one ______________ account in the general ledger.               141.If a certain type of transaction occurs with.
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6 - 1 Inventories aEx. 212 Shoemaker Department Store prepares monthly financial statements but only takes a physical count of merchandise inventory at the end of the year. The following information has been developed for the month of July:   At Cost At Retail Beginning inventory$  30,000$  50,000 Merchandise purchases99,000150,000 The net sales for July amounted to.
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7 - 1 Accounting Information Systems Ex. 123 Maldanado Company has a balance in its Accounts Payable control account of $10,500 on January 1, 2014. The subsidiary ledger contains three accounts: Smith Company, balance $3,000; White Company, balance $2,500 and Marino Company. During January, the following payable-related transactions occurred. PurchasesPaymentsReturns Smith Company$8,500$6,000$   -0- White Company5,2502,5001,500 Marino Company.
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7 - 1 Accounting Information Systems Ex. 134 Selected account balances for Lightning Company at January 1, 2014, are presented below. Accounts Payable $20,000 Accounts Receivable   22,000 Cash   12,000 Inventory   13,500 Lightning's sales journal for January shows a total of $140,000 in the selling price column, and its one-column purchases journal for January shows a.
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7 - 1 Accounting Information Systems Ex. 133 Gaston Company began business on October 1. The partial sales journal, as it appeared at the end of the month, follows: SALES JOURNALPage 1 ——————————————————————————————————————————— InvoicePost. DateAccount DebitedNumberRef.Amount ——————————————————————————————————————————— Oct.5Robin Pryor1001375 11Ted Haag1002335 16Robin Pryor1003718 19Betty Frye1004147 26Nancy Sloan10051,184 2,759 1.Open general ledger T-accounts for Accounts Receivable (No. 112) and Sales Revenue (No. 401) and an accounts.
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6 - 1 Inventories Ex. 192 Shanrock Company uses the periodic inventory method and had the following inventory information available: UnitsUnit CostTotal Cost 1/1Beginning Inventory100$4$   400 1/20Purchase400$62,400 7/25Purchase200$71,400 10/20Purchase   300$8  2,400 1,000$6,600 A physical count of inventory on December 31 revealed that there were 400 units on hand. Instructions Answer the following independent questions and show computations supporting your answers. 1.Assume that.
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7 - 1 Accounting Information Systems 62.Correcting entries are journalized in a.a special journal. b.the general journal. c.the general ledger. d.a correcting journal. 63.Adjusting entries are recorded a.only on the worksheet. b.only in the general ledger. c.in the general journal. d.in the special journals. 64.All of the column totals in the cash receipts journal are posted to general ledger accounts except the a.Accounts.
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6 - 1 Inventories 174.GAAP defines market for lower-of-cost-or market essentially as a.net realizable value. b.estimated selling price in the ordinary course of business. c.replacement cost. d.replacement cost less costs of disposal. 175.Inventory written down under lower-of-cost-or market may be written back up to original cost in a subsequent period under GAAP              IFRS a.Yes              No b.Yes              Yes c.No              No d.No              Yes 176.The option.
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6 - 1 Inventories Ex. 207 Galena Pharmacy reported cost of goods sold as follows:      2014      2015  Beginning inventory$   54,000$   64,000 Cost of goods purchased  847,000  891,000 Cost of goods available for sale901,000955,000 Ending inventory    64,000    55,000 Cost of goods sold$837,000$900,000 Jim Holt, the bookkeeper, made two errors: (1)2014 ending inventory was overstated by $7,000. (2)2015 ending inventory was understated by.
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6 - 1 Inventories BE 185 Shellhammer Company's inventory records show the following data for the month of September: UnitsUnit Cost Inventory, September 1100$3.34 Purchases:September 84503.50 September 183503.70               A physical inventory on September 30 shows 200 units on hand. Calculate the value of the ending inventory and cost of goods sold if the company uses weighted average.
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6 - 1 Inventories SHORT-ANSWER ESSAY QUESTIONS S-A E  227 FIFO and LIFO are the two most common cost flow assumptions made in costing inventories. The amounts assigned to the same inventory items on hand may be different under each cost flow assumption. If a company has no beginning inventory, explain the difference in.
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7 - 1 Accounting Information Systems 21.The reference column in a sales journal is used to indicate the general ledger account number when the entry is posted. 22.Postings are generally made more frequently to the general ledger control accounts than to the individual accounts in the subsidiary ledgers. 23.The amounts appearing in the Inventory.
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7 - 1 Accounting Information Systems EXERCISES Ex. 121 After Picard Company had completed all posting for the month of December, the sum of the balances in the following accounts payable subsidiary ledger did not agree with the balance of the control account in the general ledger. NameRyker’s Address286 Buck Avenue ——————————————————————————————————————————— DateItemPost. Ref.DebitCreditBalance ——————————————————————————————————————————— Dec.2P252,4002,400 NameGeordie Company Address818 Western Avenue ——————————————————————————————————————————— DateItemPost. Ref.DebitCreditBalance ——————————————————————————————————————————— Dec.1Balance7,600 10CP237,600— 20P323,3003,300 29J158004,100 NameLaforge.
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7 - 1 Accounting Information Systems 72.Cash from sales of merchandise will be recorded in the a.purchases journal. b.sales journal. c.cash receipts journal. d.general journal. 73.Postings from the purchases journal to the general ledger are made a.daily. b.monthly. c.weekly. d.yearly. 74.The individual amounts in the Accounts Payable column in the cash payments journal are posted to the subsidiary ledger a.daily. b.monthly. c.weekly. d.yearly. 75.Debit postings to the.
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7 - 1 Accounting Information Systems MULTIPLE CHOICE QUESTIONS 32.The principle of an efficient accounting system that states that an accounting system should accommodate a variety of users is a.cost effectiveness. b.flexibility. c.useful output. d.implementation. 33.Which of the following is not a basic principle of designing and developing an effective accounting information system? a.Approval by the SEC b.Usefulness c.Flexibility d.Cost effectiveness 34.A company.
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7 - 1 Accounting Information Systems Ex. 130 Circle the correct answer to each situation. (a)A sales journal will be used for: Credit SalesCash SalesSales Discounts YesNoYesNoYesNo (b)A single-column purchases journal will be used for: Purchase Returns Cash PurchasesPurchases on Accountand Allowances YesNoYesNoYesNo (c)A multi-column purchases journal will be used for: Supplies PurchasedEquipment Purchased Cash Purchaseson Accounton Account YesNoYesNoYesNo (d)A cash payments journal will.
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7 - 1 Accounting Information Systems Ex. 125 Devotchka Co. uses special journals and a general journal. The following transactions occurred during May 2014. May1Z. Devotchka invested $25,000 cash in the business. 2Sold merchandise to A. A. Bondy for $5,600 cash. The cost of the merchandise sold was $3,500. 3Purchased merchandise for $4,300 from Y. Vandyver.
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7 - 1 Accounting Information Systems Ex. 126 Danielson Company uses a sales journal, a cash receipts journal, and a general journal to record transactions with its customers. Record the following transactions in the appropriate journals. The cost of all merchandise sold was 60% of the sales price. July2Sold merchandise for $18,000 to B..
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6 - 1 Inventories COMPLETION STATEMENTS               216.Accounting for inventories is important because inventories affect the ______________ section of the balance sheet and the ______________ section on the income statement.               217.In a manufacturing company, goods that are ready to be sold to customers are referred to as ________________, whereas in a merchandising company.
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7 - 1 Accounting Information Systems 82.Proving the equality of the totals in the columns of multiple-column special journals is called a.posting to the subsidiary. b.debiting and crediting. c.footing and crossfooting. d.updating the master file. 83.If a company records merchandise it returns to suppliers in the general journal, then a.a posting must be made only to the accounts.
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7 - 1 Accounting Information Systems 102.All of the following are advantages of using subsidiary ledgers except they a.eliminate errors in individual accounts. b.free the general ledger of excessive details. c.show, in a single account, transactions affecting one customer or one creditor. d.make possible a division of labor. 103.Which of the following is not an advantage of.
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6 - 1 Inventories Ex. 199 Compute the lower-of-cost-or-market valuation for Gantner Company's total inventory based on the following:Inventory CategoriesCost DataMarket Data A$18,000$16,900B  13,900  14,600C  21,000  20,500 Ex. 200 The controller of Alt Company is applying the lower-of-cost-or-market basis of valuing its ending inventory. The following information is available:     Cost   Market Lawnmowers: Self-propelled$14,800$17,000 Push type  19,000  18,000 Total  33,800  35,000 Snowblowers: Manual29,80031,000 Self-start .
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6 - 1 Inventories Ex. 208 This information is available for Eaton's Photo Corporation for 2014 and 2015.    2014        2015 Beginning inventory$ 200,000$ 300,000 Ending inventory300,000380,000 Cost of goods sold1,150,0001,330,000 Sales revenue1,600,0001,900,000 InstructionsCalculate inventory turnover, days in inventory, and gross profit rate for Eaton's Photo Corporation for 2014 and 2015. Comment on any trends. .
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7 - 1 Accounting Information Systems 52.In which journal would a cash purchase of inventory be recorded? a.Purchases journal b.General journal c.Cash payments journal d.None of these answer choices are correct. 53.The individual amounts in the sales journal are posted to the accounts receivable subsidiary ledger a.daily. b.weekly. c.monthly. d.yearly. 54.A sales journal is used to record a.only cash sales of merchandise. b.sales of.
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7 - 1 Accounting Information Systems Ex. 127 Hawk Company uses a single-column purchases journal, a cash payments journal, and a general journal to record transactions with its suppliers and others. Record the following transactions in the appropriate journals. Transactions Oct.5Purchased merchandise on account for $19,000 from Harrelson Company. Terms:  2/10, n/30; FOB shipping point. Oct.6Paid.
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6 - 1 Inventories Ex. 197 Queen Company is in the electronics industry and the price it pays for inventory is decreasing.InstructionsIndicate which inventory method will:a.provide the highest ending inventory.b.provide the highest cost of goods sold.c.result in the highest net income.d.result in the lowest income tax expense.e.produce the most stable earnings over several.
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6 - 1 Inventories Ex. 193 Lester Company sells many products. Hackenberry is one of its popular items. Below is an analysis of the inventory purchases and sales of Hackenberry for the month of March. Lester Company uses the periodic inventory system.           Purchases         Sales         UnitsUnit CostUnitsSelling Price/Unit 3/1Beginning inventory100$40 3/3Purchase60$50 3/4Sales70$80 3/10Purchase200$55 3/16Sales80$90 3/19Sales60$90 3/25Sales40$90 3/30Purchase40$65 Instructions (a)Using the FIFO assumption, calculate the amount charged.
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7 - 1 Accounting Information Systems Ex. 122 On December 1, the accounts receivable control account balance in the general ledger of the Worf Company was $9,000. The accounts receivable subsidiary ledger contained the following detailed customer balances: Stewart $2,000, Gates $2,100, Burton $2,600, and Levar $2,300. The following information is available from.
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6 - 1 Inventories Ex. 196 Washington Bottom Company reports the following for the month of June. UnitsUnit CostTotal Cost June 1  Inventory300$5$1,500 12  Purchase45062,700 23  Purchase75086,000 30  Inventory180 Instructions (a)Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO. (b)Compute the cost of the ending inventory and the cost of goods.
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6 - 1 Inventories Ex. 203 Morton Watch Company reported the following income statement data for a 2-year period.    2014       2015   Sales revenue$260,000$320,000 Cost of goods sold Beginning inventory32,00044,000 Cost of goods purchased  193,000  225,000 Cost of goods available for sale225,000269,000 Ending inventory    44,000    57,000 Cost of goods sold  181,000  212,000 Gross profit$  79,000$108,000 Mortan uses a periodic inventory system..
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6 - 1 Inventories MATCHING 226.Match the items below by entering the appropriate code letter in the space provided. A.Merchandise InventoryF.First-in, first-out (FIFO) method B.Work in processG.Last-in, first-out (LIFO) method C.FOB shipping pointH.Average-cost method D.FOB destinationI.Inventory turnover E.Specific identification methodJ.Current replacement cost ____              1.Measures the number of times the inventory sold during the period. ____              2.Tracks the actual physical flow.
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6 - 1 Inventories Ex. 205 For each of the independent events listed below, analyze the impact on the indicated items at the end of the current year by placing the appropriate code letter in the box under each item. Code:O=  item is overstated U=  item is understated NA=  item is not affected Events Items Assets Owner’s Equity Cost of Goods.
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7 - 1 Accounting Information Systems 11.A subsidiary ledger provides up-to-date information on specific account balances. 12.An advantage of using a subsidiary ledger is that one employee must post to both the subsidiary ledger and the general ledger. 13.Special journals are used to record unique transactions which do not occur very often. 14.A cash receipts.
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6 - 1 Inventories Ex. 195 Ford Co. uses a periodic inventory system. Its records show the following for the month of May, in which 75 units were sold. UnitsUnit CostTotal Cost May   1  Inventory35$  8$  280 15  Purchases3012360 24  Purchases  4013    520 Totals105$1,160 InstructionsCompute the ending inventory at May 31 and cost of goods sold using the FIFO.
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6 - 1 Inventories BRIEF EXERCISES BE 180 Waegelein Company identifies the following items for possible inclusion in the physical inventory. Indicate whether each item should be included or excluded from the inventory taking. 1.Goods shipped on consignment by Waegelein to another company. 2.Goods in transit from a supplier shipped FOB destination. 3.Goods shipped via common carrier.
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6 - 1 Inventories Ex. 209 The following information is available for Heller Company: Beginning inventory$  60,000Cost of goods sold640,000Ending inventory100,000Sales revenue1,000,000 InstructionsCompute each of the following:(a)Inventory turnover.(b)Days in inventory. aEx. 210 Winsor Company uses the perpetual inventory system and the LIFO method. The following information is available for the month of May: May1Beginning inventory20 units @ $5 10Purchase20.
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7 - 1 Accounting Information Systems BRIEF EXERCISES BE 115 Match each of the principles and phases in the development of an accounting system with the statement that best describes them. a.Cost effectivenessb.Flexibility c.Useful output _____1.Information must be understandable, relevant, reliable, timely, and accurate. _____2.Benefits of information must outweigh the cost of providing it. _____3.The system should accommodate.
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7 - 1 Accounting Information Systems Ex. 136 CASH PAYMENTS JOURNALPage 45 ——————————————————————————————————————————— OtherAccounts Ck.AccountPost.AccountsPayableInventoryCash DateNo.DebitedRef.Dr.Dr.Cr.Cr. ——————————————————————————————————————————— 20— Jan.4659N. Barger(a)4,000403,960 11660Prepaid Rent(b)1,0001,000 13661Inventory(c)565565 14662Owner’s Drawings(d)2,0002,000 18663Yount(e)1,3001,300 20664Inventory(f)450450 29665Equipment(g)3,400    3,400 7,4155,3004012,675 (h)(i)(j)(k) Using the cash payments journal above, identify each of the posting references indicated by a letter, as representing: (1)a posting to a general ledger account. (2)a posting to a subsidiary ledger account. (3)that no posting is required. f. 1 Ex. 137 Shown below is a.
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7 - 1 Accounting Information Systems Ex. 132 Marks Company uses four special journals, (cash receipts, cash payments, sales, and purchases journal) in addition to a general journal. On November 1, 2014, the control accounts in the general ledger had the following balances:  Cash $12,000, Accounts Receivable $200,000 and Accounts Payable $42,000. Selected.
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6 - 1 Inventories Ex. 201 Nolen Company is preparing the annual financial statements dated December 31, 2014. Information about inventory stocked for regular sale follows: QuantityUnit CostReplacement Cost Itemon HandWhen Acquired(market) at year end A50$20$19 B1004545 C205962 D404036 Instructions Compute the valuation for the December 31, 2014, inventory using the lower-of-cost-or-market basis. Ex. 202 Foley Company applied FIFO to its inventory and.
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6 - 1 Inventories Ex. 206 Baden's Hardware Store prepared the following analysis of cost of goods sold for the previous three years:    2013   2014   2015 Beginning inventory 1/1$40,000$18,000$25,000 Cost of goods purchased  50,000  55,000 70,000 Cost of goods available for sale90,00073,00095,000 Ending inventory 12/31  18,000  25,000  40,000 Cost of goods sold$72,000$48,000$55,000 Net income for the years 2013,.
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