Allied Products maintains a large inventory. The company has used the LIFO inventory method for many years, during which the purchase costs of its products have risen substantially. (More than one of the following answers may be correct.)
a. Allied would have reported a higher net income in past years if it had been using the average-cost method.
b. Allied's financial statements imply a lower inventory turnover rate than they would if the company were using FIFO.
c. If Allied were to let its inventory fall far below normal levels, the company's gross profit rate would decline.
d. Allied would have paid more income taxes in past years if it had been using the FIFO method.

Under a perpetual inventory system

a. cost of goods sold is recorded with a period end adjusting entry

b. purchase discounts are not recorded inventory

c. purchases are recorded only at the end of the period

d. cost of goods sold is recorded with each sale

The inventory records for Radford Company reflected the following

What is the weighted average cost per unit for May?

Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied (seller) products.

May  3 Allied made its first and only purchase of inventory for the period on May 3 for 2,000 units at a price of $10 cash per unit (for a total cost of$20,000).
     5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total:$21,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $15,000.
     7 Macy returns 125 units because they did not fit the customer's needs (invoice amount:$1,750). Allied restores the units, which cost $1,250, 10 its inventory.
     8 Macy discovers that 200 units are scuffed but are still of use and, therefore, keeps the units. Allied gives a price reduction (allowance) and credits Macy's accounts receivable for$300 to compensate for the damage.
    15 Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount. 

Prepare journal entries for Macy Co. to record each of the May transactions. Macy is a retailer that uses the gross method and a perpetual inventory system; it purchases these units for resale.

Which of the following accounts is not closed to the Income Summary account at the end of the accounting period? (More than one answer may be correct.)
a. Rent Expense.
b. Accumulated Depreciation.
c. Unearned Revenue.
d. Supplies Expense.

Indicate all correct answers. In the accounting cycle:
a. Transactions are posted before they are journalized.
b. A trial balance is prepared after journal entries have been posted.
c. The Retained Earnings account is not shown as an up-todate figure in the trial balance.
d. Journal entries are posted to appropriate ledger accounts.

Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied (seller) products. Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method.

May  3 Allied made its first and only purchase of inventory for the period on May 3 for 2,000 units at a price of $10 cash per unit (for a total cost of$20,000).
     5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total:$21,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $15,000.
     7 Macy returns 125 units because they did not fit the customer's needs (invoice amount:$1,750). Allied restores the units, which cost $1,250, to its inventory.
     8 Macy discovers that 200 units are scuffed but are still of use and, therefore, keeps the units. Allied gives a price reduction (allowance) and credits Macy's accounts receivable for$300 to compensate for the damage.
    15 Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount.

Which of the following statements is (are) not consistent with generally accepted accounting principles relating to asset valuation? a. Most assets are originally recorded in accounting records at their cost to the business entity. b. Subtracting total liabilities from total assets indicates what the owners’ equity in the business is worth under current market conditions. c. Accountants assume that assets such as offi ce supplies, land, and buildings will be used in business operations rather than sold at current market prices. d. Accountants prefer to base the valuation of assets on objective, verifiable evidence rather than upon appraisals or personal opinions.

Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied (seller) products. Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method.

May 3 - Allied made its first and only purchase of inventory for the period on May 3 for 2,000 units at a price of $10 cash per unit (for a total cost of$20,000).

5 - Allied sold 1,500 of the units in inventory for $14 per unit (invoice total:$21,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $15,000.

7 - Macy returns 125 units because they did not fit the customer’s needs (invoice amount:$1,750). Allied restores the units, which cost $1,250, to its inventory.

8 - Macy discovers that 200 units are scuffed but are still of use and, therefore, keeps the units. Allied gives a price reduction (allowance) and credits Macy’s accounts receivable for$300 to compensate for the damage.

15 - Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount.

Prepare journal entries to record the following transactions for a retail store. The company uses a perpetual inventory system and the gross method.

Apr. 2 - Purchased $4,600 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point.

3 - Paid$300 cash for shipping charges on the April 2 purchase.

4 - Returned to Lyon Company unacceptable merchandise that had an invoice price of $600.

17 - Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise.

18 - Purchased$8,500 of merchandise from Frist Corp. with credit terms of 1/10, n/30, invoice dated April 18, and FOB destination.

21 - After negotiations, received from Frist a $500 allowance toward the$8,500 owed on the April 18 purchase.

28 - Sent check to Frist paying for the April 18 purchase, net of the allowance and the discount.

Analyze each of the following transactions by showing the effects on the accounting equation specifically, identify the accounts and amounts (including + or -) for each transaction.

b. The company estimates that $800 of its accounts receivable is uncollectible.

Fill in the blanks in the following separate income statements a through e. Identify any negative amount by putting it in parentheses.

Prepare journal entries to record the following merchandising transactions of Cabela’s, which uses the perpetual inventory system and the gross method. Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable—Boden.

July 1 - Purchased merchandise from Boden Company for $6,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1.

2 - Sold merchandise to Creek Co. for$900 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $500.

3 - Paid$125 cash for freight charges on the purchase of July 1.

8 - Sold merchandise that had cost $1,300 for$1,700 cash.

9 - Purchased merchandise from Leight Co. for $2,200 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9.

11 - Returned$200 of merchandise purchased on July 9 from Leight Co. and debited its account payable for that amount.

12 - Received the balance due from Creek Co. for the invoice dated July 2, net of the discount.

16 - Paid the balance due to Boden Company within the discount period.

19 - Sold merchandise that cost $800 to Art Co. for$1,200 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19.

21 - Gave a price reduction (allowance) of $100 to Art Co. for merchandise sold on July 19 and credited Art’s accounts receivable for that amount.

24 - Paid Leight Co. the balance due, net of discount.

30 - Received the balance due from Art Co. for the invoice dated July 19, net of discount.

31 - Sold merchandise that cost$4,800 to Creek Co. for $7,000 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Zenith Company's Merchandise Inventory account at year-end has a balance of $91,820, but a physical count reveals that only$90,450 of inventory exists. The adjusting entry to record this $1,370 of inventory shrinkage is:

A) Dr. Purchases discounts 1,370 Cr. Cost of goods sold 1,370

B) Dr. Cost of goods sold 1,370 Cr.Merchandise inventory 1,370

C) Dr. Merchandise inventory 1,370 Cr.Inventory shrinkage expense 1,370

D) Dr. Inventory shrinkage expense1,370 Cr.Cost of goods sold 1,370

E) Dr.Cost of goods sold 90,450 Cr.Merchandise inventory 90,450