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Accounting Assignment | Inventory System Assignment

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Added on  2020-05-11

Accounting Assignment | Inventory System Assignment

   Added on 2020-05-11

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Assignment 2 AccountingQ1. Explain the inventory system followed by merchandiser.Answer:A merchandiser can follow any of inventory system out of perpetualinventory system and periodic inventory system. Under a perpetualinventory, system merchandiser needs to maintain inventory data on realtime basis and update inventory account on every sale and purchase madeby the business. On the other hand, periodic inventory system advocatesrecording inventory levels at the end of financial periods. Periodic system of inventory maintains purchases account for recordingpurchases made by the organization and sales account for recording sales[ CITATION Ste071 \l 1033 ]. Under this system cost of goods sold calculated byadding opening stock and a total of all purchases and subtracting closingstock. This is an easy system of maintaining and recording inventorytransactions. This system has a constant balance of inventory during thewhole financial period. Under this system, cost of purchases is also recordedin the purchases account. This system can choose first in first out or last infirst out or average cost as an assumption for cost flow. Under this system following journal entries are requiredRecording purchasesPurchasesDebitAccounts payableCreditRecording salesSalesDebitAccounts receivablesCreditEnd of the periodCost of goods soldDebitOpening inventoryCreditClosing inventoryDebitCost of goods soldCreditThe perpetual system of inventory maintains inventory to account forrecording purchases made by the organization, sales account for recordingsales at sale value and cost of goods sold account for recording cost of goods1
Accounting Assignment | Inventory System Assignment_1
sold [ CITATION Wey101 \l 1033 ]. Under this system cost of goods sold calculatedby y making a total of cost of goods sold the account. This is an innovativesystem of maintaining and recording inventory transactions it reduces fraudsand thefts of inventory. Under this system following journal entries are requiredRecording purchasesInventoryDebitAccounts payableCreditRecording salesSalesDebitAccounts receivablesCreditCost of goods soldDebitInventoryCreditQ2.Assume that Guardian Company uses a periodic inventory system andhas these account balances: Purchases $600,000; Purchase Returns andAllowances $25,000; Purchase Discounts $11,000; and Freight-in $19,000;beginning inventory of $45,000; ending inventory of $55,000; and net salesof $750,000.( 3 marks)Required: Determine the cost of goods sold. Answer:Purchases $ 600,000.00 Purchase Returns and Allowances $ (25,000.00)Purchase Discounts $ (11,000.00)Freight-in $ 19,000.00 Beginning inventory $ 45,000.00 Goods available for sale $ 628,000.00 Less:Ending inventory $ 55,000.00 Cos of goods sold $ 573,000.00 3.Deloy Company gathered the following condensed data for the year ended December 31, 2016(4 marks)Cost of goods sold $ 690,000Net sales 1,250,000Administrative expenses 234,000Interest expense 58,0002
Accounting Assignment | Inventory System Assignment_2

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