Assume a company uses the periodic inventory system and has a beginning merchandise inventory balance of $10,000,purchases of $150,000,and sales of $250,000.The company closes its records once a year on December 31.In the accounting records,the merchandise inventory account would be expected to have a balance on December 31 prior to adjusting and closing entries that was
A)indeterminate.
B)less than $5,000.
C)more than $5,000.
D)equal to $5,000.

Question

Quizplus · Accepted Answer

In a periodic inventory system, the merchandise inventory account is not updated for purchases or sales during the year. Therefore, the balance remains at the beginning inventory amount until year-end adjustments, making it indeterminate before adjustments.

Assume a Company Uses the Periodic Inventory System and Has