3 if the physical count of inventory revealed 158000

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Survey of Accounting
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Chapter 4 / Exercise 1
Survey of Accounting
Warren
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3. If the physical count of inventory revealed $158,000 of inventory on hand and the inventory records reported $163,000, what would be the necessary adjusting entry to record inventory shrinkage?
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Survey of Accounting
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Chapter 4 / Exercise 1
Survey of Accounting
Warren
Expert Verified
debit Cost of Goods Sold, $163,000; credit Inventory, $158,000 debit Inventory, $158,000; credit Cost of Goods Sold, $158,000 debit Cost of Goods Sold, $5,000; credit Inventory, $5,000 4. Inventory is classified on the balance sheet as a current liability long-term asset current asset long-term liability 5. A company using the periodic inventory system has inventory costing $182 on hand at the beginning of a period. During the period, merchandise costing $440 is purchased. At year-end, inventory costing $322 is on hand. The cost of goods sold for the year is $300 $182 $322 $440
6. In a perpetual inventory system, when merchandise is returned to the supplier, Cost of Goods Sold is debited as part of the transaction.
7. In a perpetual inventory system, merchandise returned to vendors reduces the inventory account.
8. The form of the balance sheet in which assets, liabilities, and stockholders' equity are presented in a downward sequence is called the report form.
9. Purchased goods in transit, shipped FOB destination, should be excluded from ending inventory of the buyer. True False
10. If the ownership of merchandise passes to the buyer when the seller delivers the merchandise for shipment, the terms are stated as FOB destination.
Chapter 6 1. If ending inventory for the year is understated, net income for the year is overstated.
2. In valuing merchandise for inventory purposes, net realizable value is the estimated selling price less any direct costs of disposal.

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