# Inventory Systems

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Inventory Systems and Calculating Revenues, Expenses, and Income

Inventory Systems and Calculating Revenues, Expenses, and Income
QS 5-8A
Contrasting periodic and perpetual systems

Identify whether each description best applies to a periodic or a perpetual inventory system. a. Provides more timely information to managers. - Perpetual

b. Requires an adjusting entry to record inventory shrinkage – Perpetual

c. Markedly increased in frequency and popularity in business within the past decade. - Perpetual

d. Records cost of goods sold each time a sales transaction occurs. - Perpetual

Cost of goods sold = (Purchases + Beginning inventory – ending inventory)
Gross Profit = (Net Sales – COGS)
Net Income (Gross Profit – Expenses)

a.36000 + 6000 - x = 3405042000 - x = 34050-x = -7950x = 7950 | b.x + 17050 - 2700 = 15900x + 14350 = 15950x = 1600 | c.36000 - x = 3750-x = 3750 - 36000-x = -32250x = 32250 | d.32000 + 7000 - 6600 = x32400 = x | e.5600 + 2560 - x = 56008160 - x = 5600-x = -2560x = 2560 | | | x + 7500 - 9000 = 32250x - 1500 = 32250x = 33750 | x - 32400 = 45600x = 78000 | |

Journalize the following merchandising transactions for CSI Systems assuming it uses (a) a periodic inventory system and (b) a perpetual inventory system.
1. On November 1, CSI Systems purchases merchandise for \$1,400 on credit with terms of 2_5, n_30, FOB shipping point; invoice dated November 1. n_30, FOB shipping point; invoice dated November 1.
2. On November 5, CSI Systems pays cash for the November 1 purchase.
3. On November 7, CSI Systems discovers and returns \$100 of defective merchandise purchased on
November 1 for a cash refund.
4. On November 10, CSI Systems pays \$80 cash for transportation costs with the November 1 purchase.
5. On November 13, CSI Systems sells merchandise for \$1,500 on credit. The cost of the merchandise
is...

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