15. Jason\'s Jellybean shop sold Jellybeans with a retail price of S40 and a sal
ID: 2544580 • Letter: 1
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15. Jason's Jellybean shop sold Jellybeans with a retail price of S40 and a sales tax of 10% The joumal eary for the Jellybeans would include a a. Debit to Sales Tax Payable of $4 b. Credit to Sales Tax Expense of $4 e· Credit to Sales Tax Payable of$4 d. Debit to Sales Tax Expense of s4 Please use the information below to answer questions 16 through 19: During the month, Compary P bought 100 units for $10 per unit on credit, and sold 77 units for $30 per unit on credt Company P started the month with 20 units of inventory. Throughout time, Company P has always bought inventory for $10 per unit. Company Ploses its books every month. 16. Assuming Company P uses the periodic method, which of the following would be recorded upom the purchase of inventory a. Credit Inventory $3,000 b. Debit Inventory $1,000 c. Credit Purchases $3,000 d. Debit Purchases $1,000 1 . Amimpnuseseould b neoded p be uro inventory: a. Credit Inventory $3,000 b. Debit Inventory $1,000 c. Credit Purchases $3,000 d. Debit Purchases $1,000 18. Assuming Company P uses the periodic method, which of the following would be recorded as an adjusting entry at the end of the month, when the company closes its books: a. Debit Cost of Goods Sold $2,310 b. Credit Cost of Goods Sold $2,310 c. No Adjusting Entry is Required d. Debit Cost of Goods Sold $770 Assuming Company P uses the perpetual method, which of the following would be recorded as an adjusting entry at the end of the month, when the company closes its books: a. Debit Cost of Goods Sold $2,310 b. Credit Cost of Goods Sold $2,310 c. No Adjusting Entry is Required d. Debit Cost of Goods Sold $770Explanation / Answer
Under periodic inventory system, the sales and purchases are recorded as they occur, but inventory balance is updated at the end of each accounting period.
Under perpetual inventory system, inventory and cost of goods sold are updated for each sale/purchase transaction.
16. Ans d. Debit Purchases $1000
17. Ans b. Debit Inventory $1000
18. Ans. d. Debit COGS $770: Calculated as:
COGS = Number of units sold * Cost per unit = 77*10 = 770
19. Ans. c. No entry required as under perpetual system, the COGS entry is posted on each sale transaction, Therefore, no seperate adjustment entry is required at the end of the accounting period.
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