1) The adjusting entry to record inventory shrinkage would include a debit to the cost of goods sold account in a periodic inventory system.
2) In a periodic inventory system, the closing entries include a debit to the Inventory account in an amount that equals the ending inventory, and a credit to the Inventory account in an amount that equals the beginning inventory.
3) Which accounts are affected in the closing process under a periodic inventory system?
A) Gross Margin and Cost of Goods Sold
B) Cost of Goods Sold, Sales Returns and Allowances, and Sales Discounts
C) Gross Margin, Sales Returns and Allowances, and Sales Discounts
D) operating expenses, Sales Revenue, and Purchases
4) Under a periodic inventory system, which accounts would be closed to income summary with credits?
A) Sales Returns and Allowances, Sales Revenue, and Inventory
B) Sales Discounts, Sales Returns and Allowances, and Purchases
C) Sales Revenue and Cost of Goods Sold
D) Sales Returns and Allowances and Sales Revenue
Table 5-3
Sales revenue
$750,000
Interest revenue
18,000
Freight in
44,000
Beginning inventory
75,000
Purchases discounts
20,000
Sales returns and allowances
44,000
Operating expenses
99,000
Interest expense
15,000
Ending inventory
72,000
Purchases
415,000
Sales discounts
25,000
William Browning, Withdrawals
61,000
Purchase returns and allowances
36,000
5) Refer to Table 5-3. Net sales is:
A) $681,000.
B) $750,000.
C) $725,000.
D) $706,000.
6) In a periodic inventory system, the closing process includes crediting the following accounts to bring their balances to zero:
A) Cost of Goods Sold and Freight In.
B) Purchases and Freight In.
C) Purchase Discounts and Sales Discounts.
D) Purchase Returns and Allowances and Purchase Discounts.
7) In a periodic inventory system, the closing process includes:
A) debiting Purchases.
B) crediting Purchase Returns and Allowances.
C) debiting Sales Discounts.
D) debiting Inventory for the ending balance.
Match the following.
A) Cost of Goods Sold
8) The account used to offset the adjustment to inventory to the actual amount on hand
9) Following is a random list of some of the accounts and their December 31, 2014, balances for Carmen & Company. Carmen & Company uses a periodic inventory system and all account balances are normal.
Purchases $320,000
Sales revenue 460,000
Interest revenue 23,000
Salary expense45,000
Freight in 17,000
Purchase discounts 31,000
Sales returns and allowances35,000
Interest expense 18,000
Delivery expense 24,000
Sales discounts 27,000
Insurance expense 16,000
Purchase returns and allowances 46,000
B.J. Carmen, Capital 30,000
Utilities expense14,000
Amortization expense-equipment10,000
B.J. Carmen, Withdrawals 15,000
The beginning and ending amounts for inventory are $58,000 and $65,000, respectively.
Prepare the closing entries for Carmen & Company.
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