Question 1 - Record transactions for a perpetual system
Bingerton Industries uses a perpetual inventory system. The company began the year with inventory of $95,000. Purchases of inventory on account during the year totaled $320,000. Merchandise costing $345,000 was sold on account for $540,000.
Required: Record transactions for the purchase and sale of inventory in correct format.
Question 2 - Record inventory purchase and purchase return using a perpetual system
On June 5, Staley Electronics purchases 220 units of inventory on account for $22 each. After closer examination, Staley determines 20 units are defective and returns them to its supplier for full credit on June 9. All remaining inventory is sold on June 16 for $39 each.
Required: Record transactions in the correct journal entry format for the purchase, return, and sale of inventory assuming the company uses a perpetual inventory system.
Question 3 - Calculate inventory using the lower of cost and net realizable value
A company like Golf USA that sells golf-related merchandise typically will have inventory items such as golf clothing and golf equipment. As technology advances the design and performance of the next generation of drivers, the older models become less marketable and therefore decline in value. Suppose that in 2018, Ping (a manufacturer of golf clubs) introduces the MegaDriver II, the new and improved version of the MegaDriver. Below are amounts related to Golf USA's inventory at the end of 2018.
|
Inventory
|
Quantity
|
Cost
|
NRV
|
|
Shirts
|
27
|
$ 52
|
$ 74
|
|
MegaDriver
|
7
|
350
|
210
|
|
MegaDriver II
|
22
|
310
|
430
|
1. Calculate ending inventory using the lower of cost and net realizable value (NRV).
2. Record any necessary adjustment to inventory.