## Illustrate periodic inventory procedure, Accounting Basics

Assignment Help:

Q. Illustrate Periodic inventory procedure?

Companies by means of periodic inventory procedure make no entries to the Merchandise Inventory account nor do they maintain unit records during the accounting period. Therefore these companies have no up-to-date balance beside which to compare the physical inventory count at the end of the period. As well these companies make no attempt to determine the cost of goods sold at the time of each sale. In its place they compute the cost of all the goods sold during the accounting period at the end of the period. To conclude the cost of goods sold a company have to know

- Starting inventory cost of goods on hand at the beginning of the period.

- Net cost of purchases throughout the period.

- Ending inventory cost of unsold goods by the end of the period.

The company would demonstrate this information as follows

Beginning inventory                                                               \$ 34,000

Add: Net cost of purchases during the period                                               140,000

Cost of goods available for sale during the period                             \$174,000

Deduct: Ending inventory                                                      20,000

Cost of goods sold during the period                                                 \$154,000

In this schedule notice that the company start the accounting period with USD 34000 of merchandise and purchased an additional USD 140000 making a total of USD 174000 of goods that could have been sold during the period. After that a physical inventory showed that USD 20000 remained unsold which implies that USD 154000 was the cost of goods sold during the period. Obviously the USD 154000 isn't necessarily the precise amount of goods sold because no actual record was made of the dollar cost of the goods sold. Periodic inventory procedure essentially assumes that everything not on hand at the end of the period has been sold. This method ignores problems such as breakage or theft because the Merchandise Inventory account contains no up-to-date balance at the end of the accounting period against which to compare the physical count.

#### Introduction to Accounting, Hi Team, I want to get an accounting assignmen...

Hi Team, I want to get an accounting assignment to be done according to NZ university standards. It''s from basic accounting (introduction to accounting). Need to be done by 10th

#### Define workout expenditures, Workout Expenditures Professional fees (le...

Workout Expenditures Professional fees (legal, accounting, appraisal) paid to entities unaffiliated with the investment company's advisor or sponsor in connection with any of t

#### What is accrued expenses, Q. What is Accrued expenses? Accrued expenses,...

Q. What is Accrued expenses? Accrued expenses, accruals -- an expense that has been incurred though not yet paid for.Salaries are a good instance. Employees earn or accrue salar

#### What is estimated useful life, Q. What is Estimated useful life? The es...

Q. What is Estimated useful life? The estimated useful life of an asset is the approximate time that a company can use the asset. Useful life is estimation not an exact measure

#### Concepts of accounting, implication of applying aacounting concept wronly

implication of applying aacounting concept wronly

#### Film and television costs - accounting policies, Q. Film and television cos...

Q. Film and television costs- accounting policies? Film as well as television production and participation costs are expensed based on the ratio of the current period's gross r

#### Non-compliance, Elaborate the consequences of non-compliance of each of the...

Elaborate the consequences of non-compliance of each of the accounting concepts.

#### How to manage barter income?, How to create account for barter transactions...

How to create account for barter transactions? As My Company is providing a service to another company and that company is reimbursing us with his service.

#### Accounting, #questiSean Corp. issued a \$60,000, 10 year bond at the face ra...

#questiSean Corp. issued a \$60,000, 10 year bond at the face rate of 8% annually on 1/1/X0. The market rate was 10%. How much cash will the bond investors receive at the end of the

#### Hi, 1. Carmen Santiago works for a number of businesses as a  “consultant...

1. Carmen Santiago works for a number of businesses as a  “consultant.” She has helped design accounting systems,  provided accounting services, and analyzed the financial  s