Vocab
a computerized system that tracks inventory levels in real time. It records every purchase, sale, and adjustment, and provides an up-to-date view of inventory.
Perpetual Inventory System
ABC Company had the following inventory purchases during the month of February:
During February, the company sold 350 units.
Using FIFO and the periodic inventory system, calculate the ending inventory value at the end of February.
$2,200
XYZ Company uses the periodic weighted average cost method. Beginning inventory is 100 units at $8 each. A purchase of 200 units at $10 each is made. What is the weighted average cost per unit at the end of the period?
$9.33
XYZ Company estimates that 2% of its $10,000 accounts receivable will be uncollectible. What journal entry should they record?
Debit: Bad debt expense $200
Credit: Allowance for doubtful accounts $200
On January 5, XYZ Company purchased 100 units of inventory at $10 each, with shipping terms of FOB Shipping Point. The total purchase was $1,000. Shipping costs of $50 were incurred. What is the journal entry for this transaction?
Debit: Inventory 1,050
Credit: Accounts payable 1,050
is defined as the direct costs attributable to the production of the goods sold by a company.
COGS (Cost of goods sold)
XYZ Company had the following inventory transactions in March:
At the end of March, XYZ Company counted 200 units remaining in inventory.
Using the periodic inventory system and LIFO, calculate the Cost of Goods Sold (COGS) for March.
5,960
XYZ Company uses the perpetual weighted average cost method. Beginning inventory consists of 50 units at $6 each. The company purchases 50 more units at $8 each. What is the new weighted average cost per unit after this purchase?
$7.00
XYZ Company writes off a $300 account from a customer who has gone bankrupt. What journal entry should be recorded?
Debit: allowance for doubtful accounts $300
Credit: Accounts receivable $300
XYZ Company sells inventory worth $1,500 to a customer on account. The cost of making the inventory was $1,000. What is the journal entry for this sale AND the related cost of goods sold?
Debit: Accounts Receivable 1,500 Credit: Sales Revenue
Debit: COGS $1,000 Credit Inventory: $1,000
is a shipping term that indicates that the buyer takes responsibility for goods when they are shipped and during the shipping journey.
FOB Shipping Point
ABC Company uses a perpetual inventory system and had the following inventory transactions in April:
Using FIFO under the perpetual inventory system, calculate the Cost of Goods Sold (COGS) for April.
1,900
XYZ Company uses the periodic weighted average cost method. Beginning inventory is 200 units at $5 each. Purchases during the period:
100 units at $6 each
200 units at $7 each
At the end of the period, 250 units remain. What is the ending inventory value?
1,500
XYZ Company previously wrote off a $500 account but later received full payment from the customer. What journal entries should be made?
Debit: accounts receivable $500
Credit: allowance for doubtful accounts $500
Debit: cash $500
Credit: accounts receivable $500
XYZ Company purchases inventory on account worth $1,000. The shipping cost is $30, but the terms are FOB Destination. What is the journal entry for this purchase?
Debit: Inventory 1,000 Credit: Accounts payable 1,000
It's an accounting method that assumes the oldest inventory is sold first
FIFO
XYZ Company uses a perpetual inventory system and had the following inventory transactions in May:
Using LIFO under the perpetual inventory system, calculate the Ending Inventory at the end of May.
1,170
XYZ Company uses the perpetual weighted average cost method. Beginning inventory is 30 units at $4 each.
Buy 20 units at $6 each
Sell 25 units
Buy 50 units at $8 each
Sell 40 units
What is the COGS at the end of the period.
397.20
XYZ Company estimates 5% of its $50,000 accounts receivable will be uncollectible. The Allowance for Doubtful Accounts has a $1,000 credit balance before adjustment. What adjusting journal entry should be made?
Debit: bad debt expense $1,500
Credit: allowance for doubtful accounts $1,500
On April 5, XYZ Company purchases inventory worth $3,500 on account from a supplier, with terms 2/10, n/30. The company pays the full amount on April 12. What is the journal entry on April 12?
Debit: Accounts Payable 3,500
Credit: Cash 3,430
Credit: Inventory 70
represents management's estimate of the amount of accounts receivable that will not be paid by customers.
Allowance for doubtful accounts
ABC Company uses a perpetual inventory system and had the following inventory transactions in June:
June 1: Beginning inventory: 80 units @ $10 each
June 5: Purchase: 60 units @ $12 each
June 10: Sale: 70 units
June 15: Purchase: 40 units @ $14 each
June 20: Sale: 50 units
June 25: Purchase: 30 units @ $16 each
Using LIFO under the perpetual inventory system, calculate the Cost of Goods Sold (COGS) for June.
1,480
XYZ Company uses the perpetual weighted average cost method.
Beginning inventory: 40 units at $9 each
Purchase 60 units at $12 each
Sell 50 units
Purchase 100 units at $10 each
Sell 80 units
What is the ending inventory after the period
$718.90
XYZ Company estimates 6% of its $60,000 accounts receivable will be uncollectible. The Allowance for Doubtful Accounts has a $500 debit balance before adjustment. What adjusting journal entry should be made?
Debit: bad debt expense $4,100
Credit: allowance for doubtful accounts $4,100
On March 1, XYZ Company sells inventory worth $2,000 to a customer on account, with terms 2/10, n/30. The customer pays the full amount on March 9. What is the journal entry on March 9 when the customer pays the full amount within 10 days?
Debit: Cash 1,960
Debit: Sales Discounts $40
Credit: Accounts receivable $2,000