College Accounting (Book Only): A Career Approach
13th Edition
ISBN: 9781337280570
Author: Scott, Cathy J.
Publisher: South-Western College Pub
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Textbook Question
Chapter 10, Problem 6E
Record general
- a. A freight cost of $85 incurred on equipment purchased for use in the business was debited to Freight In.
- b. The issuance of a credit memo to Lang Company for $119 for merchandise returned was recorded as a debit to Purchases Returns and Allowances and a credit to Accounts Receivable, Lang Company.
- c. A cash sale of $68 to J. L. LaSalle was recorded as a sale on account.
- d. A purchase of merchandise from James Company in the amount of $750 with a 25 percent trade discount was recorded as a debit to Purchases and a credit to Accounts Payable of $750 each.
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Indicate in each of the spaces provided the effect of the described errors on the various elements
of a company's financial statements. All sales and purchases are on credit. Assume a periodic
inventory system.
Use the following codes:
O= amount is overstated;
U= amount is understated;
NE= no effect.
1. Excluded goods in rented
warehouse from inventory
count.
2. Goods Sold were shipped
and appropriately excluded
from ending inventory but
sale was not recorded.
3. Goods sold in transit
shipped "f.o.b. shipping
point" were not recorded as a
sale and were included in
ending inventory.
4. Goods purchased in
transit
shipped
"f.o.b.
destination" by a supplier
were recorded as a purchase
but were excluded from
ending inventory.
on
a
5. Goods held
consignment from
consignor were recorded as a
purchase and included in
ending inventory count.
Accounts
receivable
Inventory
6
Accounts
payable
Sales
Cost of
goods
sold
Net
income
Last Nam
Raouf
Course
ACC4
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If an accounting manager asks you to delay recording an invoice for the purchase of merchandise until after the closing of the general ledger, but include the merchandise in the physical count of the ending merchandise inventory (periodic inventory method), the manager is attempting to do which of the following?
a. Follow the matching principle
b. Increase the reported net income in the income statement of the current period
c. Employ the cost method of recording purchases
d. Take advantage of the credit terms related to the purchase
A retailer’s physical count of inventory was higher than that shown by the perpetual records.Which of the following could explain the difference?a. Inventory items had been counted, but the tags placed on the items had not been taken off and added to the inventory accumulation sheets.b. Credit memos for several items returned by customers had not been recorded.c. No journal entry had been made on the retailer’s books for several items returned to its suppliers.d. An item purchased FOB shipping point had not arrived at the date of the inventory count and had not been reflected in the perpetual records.
Chapter 10 Solutions
College Accounting (Book Only): A Career Approach
Ch. 10 - What do credit terms of 2/10, n/30 mean? 210 days...Ch. 10 - What is the entry to record the cash received on a...Ch. 10 - Prob. 3QYCh. 10 - Which of the following is not an advantage of the...Ch. 10 - Prob. 5QYCh. 10 - What is the normal balance for each of the...Ch. 10 - What does an X under the total of a special...Ch. 10 - Prob. 3DQCh. 10 - In a cash receipts journal, both the Accounts...Ch. 10 - If a cash payments journal is supposed to save...
Ch. 10 - Describe the posting procedure for a cash payments...Ch. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - For the following purchases of merchandise,...Ch. 10 - Describe the transactions recorded in the...Ch. 10 - Describe the transactions recorded in the...Ch. 10 - Record the following transactions in general...Ch. 10 - Prob. 5ECh. 10 - Record general journal entries to correct the...Ch. 10 - Label the blanks in the column heads as either...Ch. 10 - Prob. 8ECh. 10 - Prob. 9ECh. 10 - Indicate the journal in which each of the...Ch. 10 - The following transactions were completed by...Ch. 10 - Preston Company sells candy wholesale, primarily...Ch. 10 - MacDonald Bookshop had the following transactions...Ch. 10 - The following transactions were completed by...Ch. 10 - The following transactions were completed by...Ch. 10 - The following transactions were completed by Yang...Ch. 10 - C. R. McIntyre Company sells candy wholesale,...Ch. 10 - Prob. 3PBCh. 10 - The following transactions were completed by Yang...Ch. 10 - The following transactions were completed by...Ch. 10 - Prob. 1ACh. 10 - You are the manager of the Accounts Receivable...Ch. 10 - Prob. 3ACh. 10 - Suppose we collected cash from a charge customer...Ch. 10 - Prob. 1CP
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- The company just took a physical count of inventory and found $75 worth of inventory was unaccounted for. It was either stolen or damaged. Which journal would the company use to record the correction of the error in inventory? A. sales journal B. purchases journal C. cash receipts journal D. cash disbursements journal E. general journalarrow_forwardIndicate the effect of each of the following errors on the following balance sheet and income statement items for the current and succeeding years: beginning inventory, ending inventory, accounts payable, retained earnings, purchases, cost of goods sold, net income, and earnings per share. a. The ending inventory is overstated. b. Merchandise purchased on account and received was not recorded in the purchases account until the succeeding year although the item was included in inventory of the current year. c. Merchandise purchased on account and shipped FOB shipping point was not recorded in either the purchases account or the ending inventory. d. The ending inventory was understated as a result of the exclusion of goods sent out on consignment.arrow_forwardThe following are independent errors made by a company that uses a periodic inventory system: a. failure to record a purchase of inventory on credit (however, inventory was properly counted at the end of the period) b. expensing the purchase of a machine c. failure to accrue wages d. failure to record an allowance for uncollectibles e. including collections in advance as revenue f. including payments in advance as expenses g. failure to accrue warranty costs h. discount on a note payable issued for purchase of a machine is ignored i. failure to record depreciation expense on assets purchased during the year Required: Next Level Indicate the effect of each of the preceding errors on the companys assets, liabilities, shareholders equity, and net income in the year in which the error occurs. State whether the error causes an overstatement (+), an understatement (), or no effect (NE).arrow_forward
- Errors As controller of Lerner Company, which uses a periodic inventory system, you discover the following errors in the current year: 1. Merchandise with a cost of 17,500 was properly included in the final inventory, but the purchase was not recorded until the following year. 2. Merchandise purchases are in transit under terms of FOB shipping point. They have been excluded from the inventory, but the purchase was recorded in the current year on the receipt of the invoice of 4,300. 3. Goods out on consignment have been excluded from inventory. 4. Merchandise purchases under terms FOB shipping point have been omitted from the purchases account and the ending inventory. The purchases were recorded in the following year. 5. Goods held on consignment from Talbert Supply Co. were included in the inventory. Required: For each error, indicate the effect on the ending inventory and the net income for the current year and on the net income for the following year.arrow_forwardKelley Company has completed the following October sales and purchases journals: a. Total and post the journals to T accounts for the general ledger and the accounts receivable and accounts payable ledgers. b. Complete a schedule of accounts receivable for October 31, 20--. c. Complete a schedule of accounts payable for October 31, 20--. d. Compare the balances of the schedules with their respective general ledger accounts. If they are not the same, find and correct the error(s).arrow_forwardRules of debit and credit for periodic inventory accounts Complete the following table by indicating for A through G whether the proper answer is debit or credit:arrow_forward
- Errors A company that uses the periodic inventory system makes the following errors: 1. It omits a purchase on credit from the purchases account and the ending inventory. 2. It omits a purchase on credit from the purchases account, but the ending inventory is correct. 3. It overstates the ending inventory, but purchases arc correct. Required: Indicate the effect of the preceding errors on the income statement and the balance sheet of the current and succeeding years.arrow_forwardThe physical count of inventory of a retailer was lower than shown by the perpetual records. Which of the following could explain the difference? a. Some tags for specific inventory items had mistakenly overstated the amount of those items. b. Credit memos for several items returned by customers had not been recorded. c. No journal entry had been made on the retailer's books for several items returned to its suppliers. d. An item purchased "FOB destination" had not arrived at the date of the inventory count and had not been reflected in the perpetual records.arrow_forwardThe Cloud Company employs a perpetual inventory system and the McKenzie Corporation uses a periodicbsystem. Describe the differences between the two systems in accounting for the following events: (1) purchase of merchandise, (2) sale of merchandise, (3) return of merchandise to supplier, and (4) payment of freight charge on merchandise purchased. Indicate which inventory-related accounts would be debited or credited for each event.arrow_forward
- The Cloud Company employs a perpetual inventory system and the McKenzie Corporation uses a periodic system. Describe the differences between the two systems in accounting for the following events: (1) purchase of merchandise, (2) sale of merchandise, (3) return of merchandise to supplier, and (4) payment of freight charge on merchandise purchased. Indicate which inventory-related accounts would be debited or credited for each event.arrow_forwardThe company just took a physical count of inventory and found $75 worth of inventory wasunaccounted for. It was either stolen or damaged. Which journal would the company use to record thecorrection of the error in inventory?A. sales journalB. purchases journalC. cash receipts journalD. cash disbursements journalE. general journalarrow_forwardWhich of the following statements is true for a company that uses a periodic inventory system? a.The purchase of inventory requires a debit to Inventory. b.The return of defective inventory requires a debit to Purchase Returns and Allowances. c.The payment of a purchase within the discount period requires a credit to Purchase Discounts. d.Any amounts paid for freight are debited to Inventory.arrow_forward
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