Question 1

Cost of goods sold is $108,000, ending inventory is $12,000 and purchases is $100,000. What is beginning inventory?

Accepted Answer

The formula to calculate beginning inventory is: Beginning Inventory = Cost of Goods Sold + Ending Inventory - Purchases. Plugging in the given values: $108,000 + $12,000 - $100,000 = $20,000.

Question 2

Fill in the missing amounts for each case in the table presented below: $$\begin{array} { | l | r | r | r | r | } 
\hline &  { \text { A } } &  { \text { B } } &  { \text { C } } & { \text { D } } \
\hline \text { Beginning inventory } & \$ 6,000 & \$ 7,200 & & \$ 9,100 \
\hline \text { Net purchase } & & 9,000 & 32,700 & 32,000 \
\hline \text { Freight in } & 500 & & 950 & 1,200 \
\hline \text { Cost of goods avail. for } & & & & \
\text { sale } & 50,000 & 17,250 & 45,600 & \
\hline \text { Ending inventory } & & 5,375 & 14,850 & \
\hline \text { Cost of goods sold } & 32,600 & & & 14,800 \
\hline
\end{array}$$

Accepted Answer

The answer of Fill in the missing amounts for each...

Question 3

Table 5-3 $$\begin{array} { | l | r | } 
\hline \text { Sales revenue } & \$ 750,000 \
\hline \text { Interest revenue } & 18,000 \
\hline \text { Freight in } & 44,000 \
\hline \text { Beginning inventory } & 75,000 \
\hline \text { Purchases discounts } & 20,000 \
\hline \text { Sales returns and allowances } & 44,000 \
\hline \text { Operating expenses } & 99,000 \
\hline \text { Interest expense } & 15,000 \
\hline \text { Ending inventory } & 72,000 \
\hline \text { Purchases } & 415,000 \
\hline \text { Sales discounts } & 25,000 \
\hline \text { William Browning, Withdrawals } & 61,000 \
\hline \text { Purchase reburns and allowances } & 36,000 \
\hline
\end{array}$$
-Refer to Table 5-3. Net purchases are:

Accepted Answer

Net purchases are calculated by taking the total purchases and adjusting for discounts, returns, and allowances, and adding freight in. Therefore, net purchases = Purchases - Purchases discounts - Purchase returns and allowances + Freight in = $415,000 - $20,000 - $36,000 + $44,000 = $359,000.

Question 4

Cost of goods sold plus ending inventory equals:

Accepted Answer

Cost of goods sold plus ending inventory equals the cost of goods available for sale. This is because the cost of goods available for sale is the total amount of goods a company has to sell during a period, which includes both the goods it started with (beginning inventory) and the goods it purchased or manufactured (net purchases), minus the goods it has at the end of the period (ending inventory). Adding the cost of goods sold to the ending inventory gives the total value of goods that were available to be sold.

Question 5

Beginning inventory plus net purchases and plus freight in equals:

Accepted Answer

Beginning inventory plus net purchases and plus freight in equals the cost of goods available for sale. This figure represents the total cost of merchandise that a company has available to sell during a period, before subtracting the cost of goods sold.

Question 6

Cost of goods sold is $108,000, beginning inventory is $20,000 and purchases is $100,000. What is ending inventory?

Accepted Answer

The answer of Cost of goods sold is $108,000, beginning...

Question 7

The following items were taken from the records of Slow Boat Company, which uses a periodic inventory system: $$\begin{array} { l r } 
\text { Salary payable } & \$ 1,100 \
\text { Sales revenue } & 480,000 \
\text { Freight in } & 20,000 \
\text { Beginning inventory } & 35,000 \
\text { Purchases of inventory } & 240,000 \
\text { Purchase returns and allowances } & 35,000 \
\text { Purchase discounts } & 10,000 \
\text { Sales returns and allowances } & 35,000 \
\text { Ending inventory } & 80,000 \
\text { Operating expenses } & 85,000
\end{array}$$ Prepare the cost of goods sold section for the Slow Boat Company's income statement.

Accepted Answer

The answer of The following items were taken from the...

Question 8

The following refers to periodic inventory: $$\begin{array} { | l | r | } 
\hline \text { Net sales } & \$ 198,000 \
\hline \text { Purchases } & 92,000 \
\hline \text { Purchases returns and allowances } & 1,800 \
\hline \text { Purchases discounts } & 1,250 \
\hline \text { Freight in } & 1,590 \
\hline \text { Beginning merchandise inventory } & 63,000 \
\hline \text { Ending merchandise inventory } & 37,000 \
\hline
\end{array}$$ Compute cost of goods sold.

Accepted Answer

Cost of goods sold = Beginning merchandise inventory + Purchases - Purchases returns and allowances - Purchases discounts + Freight in - Ending merchandise inventory= 63,000 + 92,000 - 1,800 - 1,250 + 1,590 - 37,000= $116,540

Question 9

Table 5-5
The following items were taken from the December 31, 2019, records of Speedy Boat Company, which uses a periodic inventory system: $$\begin{array} { | l | r | } 
\hline \text { Salary payable } & \$ 1,100 \
\hline \text { Sales revenue } & 480,000 \
\hline \text { Interest revenue } & 3,000 \
\hline \text { Freight in } & 20,000 \
\hline \text { Beginning inventory } & 35,000 \
\hline \text { Sales discounts } & 18,000 \
\hline \text { Purchases of inventory } & 240,000 \
\hline \text { Purchase retarns and allowances } & 35,000 \
\hline \text { Purchase discounts } & 10,000 \
\hline \text { Sales returns and allowances } & 35,000 \
\hline \text { Ending inventory } & 80,000 \
\hline \text { Operating expenses } & 85,000 \
\hline \text { Interest expense } & 7,000 \
\hline \text { Owner withdrawals } & 12,000 \
\hline
\end{array}$$
-Refer to Table 5-5. Cost of goods sold for Speedy Boat Company is:

Accepted Answer

Cost of goods sold = Beginning inventory + Purchases of inventory - Purchase returns and allowances - Purchase discounts - Ending inventory= 35,000 + 240,000 - 35,000 - 10,000 - 80,000= $170,000

Question 10

Purchases of inventory minus purchase discounts and minus purchase returns and allowances equals:

Accepted Answer

Net purchases are calculated by taking the total amount of purchases and subtracting any purchase discounts, returns, and allowances. This provides the actual cost of inventory purchased during the period.

Question 11

Table 5-4
The following data is for the Atlantis Merchandising, which uses a periodic inventory system: $$\begin{array} { | l | r | } 
\hline \text { Sales revenue } & \$ 600,000 \
\hline \text { Interest revenue } & 12,000 \
\hline \text { Freight in } & 42,000 \
\hline \text { Beginning inventory } & 77,000 \
\hline \text { Purchase discounts } & 19,000 \
\hline \text { Sales reburns and allowances } & 33,000 \
\hline \text { Operating expenses } & 77,000 \
\hline \text { Interest expense } & 9,000 \
\hline \text { Ending inventory } & 81,000 \
\hline \text { Purchases } & 415,000 \
\hline \text { Sales discounts } & 35,000 \
\hline \text { Omar Atlantis, Withdrawals } & 71,000 \
\hline \text { Purchase returns and allowances } & 39,000 \
\hline
\end{array}$$
-Refer to Table 5-4. The cost of goods sold for Atlantis Merchandising is:

Accepted Answer

The answer of Table 5-4
The following data is for the...

Question 12

Table 5-5
The following items were taken from the December 31, 2019, records of Speedy Boat Company, which uses a periodic inventory system: $$\begin{array} { | l | r | } 
\hline \text { Salary payable } & \$ 1,100 \
\hline \text { Sales revenue } & 480,000 \
\hline \text { Interest revenue } & 3,000 \
\hline \text { Freight in } & 20,000 \
\hline \text { Beginning inventory } & 35,000 \
\hline \text { Sales discounts } & 18,000 \
\hline \text { Purchases of inventory } & 240,000 \
\hline \text { Purchase retarns and allowances } & 35,000 \
\hline \text { Purchase discounts } & 10,000 \
\hline \text { Sales returns and allowances } & 35,000 \
\hline \text { Ending inventory } & 80,000 \
\hline \text { Operating expenses } & 85,000 \
\hline \text { Interest expense } & 7,000 \
\hline \text { Owner withdrawals } & 12,000 \
\hline
\end{array}$$
-Refer to Table 5-5. Cost of goods available for sale for Speedy Boat Company is:

Accepted Answer

Cost of goods available for sale is calculated by adding beginning inventory to the net purchases (purchases minus purchase returns and allowances and purchase discounts, plus freight in). Here, it's $35,000 (beginning inventory) + $240,000 (purchases) - $35,000 (purchase returns and allowances) - $10,000 (purchase discounts) + $20,000 (freight in) = $250,000.

Question 13

Table 5-3 $$\begin{array} { | l | r | } 
\hline \text { Sales revenue } & \$ 750,000 \
\hline \text { Interest revenue } & 18,000 \
\hline \text { Freight in } & 44,000 \
\hline \text { Beginning inventory } & 75,000 \
\hline \text { Purchases discounts } & 20,000 \
\hline \text { Sales returns and allowances } & 44,000 \
\hline \text { Operating expenses } & 99,000 \
\hline \text { Interest expense } & 15,000 \
\hline \text { Ending inventory } & 72,000 \
\hline \text { Purchases } & 415,000 \
\hline \text { Sales discounts } & 25,000 \
\hline \text { William Browning, Withdrawals } & 61,000 \
\hline \text { Purchase reburns and allowances } & 36,000 \
\hline
\end{array}$$
-Refer to Table 5-3. The cost of goods sold is:

Accepted Answer

Cost of Goods Sold (COGS) is calculated as: Beginning Inventory + Purchases - Purchase Discounts - Purchase Returns and Allowances + Freight In - Ending Inventory. Using the values from the table: $75,000 + $415,000 - $20,000 - $36,000 + $44,000 - $72,000 = $406,000.

Question 14

In a periodic inventory system, the cost of freight-in is part of the cost of goods available for sale.

Accepted Answer

In a periodic inventory system, the cost of freight-in is added to the purchase cost of inventory, becoming part of the cost of goods available for sale.

Question 15

In a periodic system, inventory balances and the cost of goods sold for the current period are determined:

Accepted Answer

In a periodic inventory system, inventory balances and the cost of goods sold are determined when a physical inventory count is taken, typically at the end of an accounting period. This contrasts with perpetual systems where inventory and COGS are updated continuously.

Question 16

Table 5-5
The following items were taken from the December 31, 2019, records of Speedy Boat Company, which uses a periodic inventory system: $$\begin{array} { | l | r | } 
\hline \text { Salary payable } & \$ 1,100 \
\hline \text { Sales revenue } & 480,000 \
\hline \text { Interest revenue } & 3,000 \
\hline \text { Freight in } & 20,000 \
\hline \text { Beginning inventory } & 35,000 \
\hline \text { Sales discounts } & 18,000 \
\hline \text { Purchases of inventory } & 240,000 \
\hline \text { Purchase retarns and allowances } & 35,000 \
\hline \text { Purchase discounts } & 10,000 \
\hline \text { Sales returns and allowances } & 35,000 \
\hline \text { Ending inventory } & 80,000 \
\hline \text { Operating expenses } & 85,000 \
\hline \text { Interest expense } & 7,000 \
\hline \text { Owner withdrawals } & 12,000 \
\hline
\end{array}$$
-Refer to Table 5-5. The net purchases for Speedy Boat Company are:

Accepted Answer

Net purchases are calculated by starting with the total purchases of inventory and then subtracting both purchase returns and allowances and purchase discounts. Therefore, $240,000 - $35,000 - $10,000 = $195,000.

Question 17

Table 5-4
The following data is for the Atlantis Merchandising, which uses a periodic inventory system: $$\begin{array} { | l | r | } 
\hline \text { Sales revenue } & \$ 600,000 \
\hline \text { Interest revenue } & 12,000 \
\hline \text { Freight in } & 42,000 \
\hline \text { Beginning inventory } & 77,000 \
\hline \text { Purchase discounts } & 19,000 \
\hline \text { Sales reburns and allowances } & 33,000 \
\hline \text { Operating expenses } & 77,000 \
\hline \text { Interest expense } & 9,000 \
\hline \text { Ending inventory } & 81,000 \
\hline \text { Purchases } & 415,000 \
\hline \text { Sales discounts } & 35,000 \
\hline \text { Omar Atlantis, Withdrawals } & 71,000 \
\hline \text { Purchase returns and allowances } & 39,000 \
\hline
\end{array}$$
-Refer to Table 5-4. Net purchases for Atlantis Merchandising are:

Accepted Answer

Net purchases = Purchases - Purchase returns and allowances - Purchase discounts= $415,000 - $39,000 - $19,000= $357,000

Question 18

Table 5-4
The following data is for the Atlantis Merchandising, which uses a periodic inventory system: $$\begin{array} { | l | r | } 
\hline \text { Sales revenue } & \$ 600,000 \
\hline \text { Interest revenue } & 12,000 \
\hline \text { Freight in } & 42,000 \
\hline \text { Beginning inventory } & 77,000 \
\hline \text { Purchase discounts } & 19,000 \
\hline \text { Sales reburns and allowances } & 33,000 \
\hline \text { Operating expenses } & 77,000 \
\hline \text { Interest expense } & 9,000 \
\hline \text { Ending inventory } & 81,000 \
\hline \text { Purchases } & 415,000 \
\hline \text { Sales discounts } & 35,000 \
\hline \text { Omar Atlantis, Withdrawals } & 71,000 \
\hline \text { Purchase returns and allowances } & 39,000 \
\hline
\end{array}$$
-Refer to Table 5-4. The total cost of goods available for sale for the Atlantis Merchandising is:

Accepted Answer

The total cost of goods available for sale is calculated by adding the beginning inventory to the net purchases and then adding freight in. Net purchases are calculated by subtracting purchase discounts and purchase returns and allowances from purchases. So, the calculation is as follows: Beginning inventory ($77,000) + Purchases ($415,000) - Purchase discounts ($19,000) - Purchase returns and allowances ($39,000) + Freight in ($42,000) = $476,000.

Question 19

Cost of goods sold is $7,400. Beginning inventory is $3,500 and ending inventory is $4,000. If there is no freight in and total purchases were $8,250, how much were purchase returns and allowances?

Accepted Answer

The answer of Cost of goods sold is $7,400. Beginning...

Question 20

Table 5-3 $$\begin{array} { | l | r | } 
\hline \text { Sales revenue } & \$ 750,000 \
\hline \text { Interest revenue } & 18,000 \
\hline \text { Freight in } & 44,000 \
\hline \text { Beginning inventory } & 75,000 \
\hline \text { Purchases discounts } & 20,000 \
\hline \text { Sales returns and allowances } & 44,000 \
\hline \text { Operating expenses } & 99,000 \
\hline \text { Interest expense } & 15,000 \
\hline \text { Ending inventory } & 72,000 \
\hline \text { Purchases } & 415,000 \
\hline \text { Sales discounts } & 25,000 \
\hline \text { William Browning, Withdrawals } & 61,000 \
\hline \text { Purchase reburns and allowances } & 36,000 \
\hline
\end{array}$$
-Refer to Table 5-3. The total cost of goods available for sale is:

Accepted Answer

The total cost of goods available for sale is calculated as the sum of beginning inventory, purchases, freight in, minus purchases discounts and purchase returns and allowances. Using the table: Beginning inventory = $75,000 Purchases = $415,000 Freight in = $44,000 Purchases discounts = $20,000 Purchase returns and allowances = $36,000 Total cost of goods available for sale = $75,000 + $415,000 + $44,000 - $20,000 - $36,000 = $478,000.

Quiz 5: Merchandising Operations and the Accounting Cycle