Question

Question 8

1. Questions 8, 9, 10, and 11 are based on the following information. ABC Co. uses a periodic approach to accounting for inventory. On December 31, 20X7, an inventory count was performed resulting in a determination that the year-end inventory balance was $700,000. December 31, 20X7 year-end account balances before considering the inventory count were as follows:

   Sales…………………………………………….$5,800,000

   Inventory………………………………………….$620,000

   Purchases…………………………………..……$3,400,000

   What adjusting entries are needed on December 31, 20X7 to account for inventory?

   	a.	Cost of goods sold……………………………….……..4,100,000                          Inventory…………………………………...………….………...700,000                          Purchases………………………………………………………3,400,000                      To record purchases and beginning (1/1/X7) inventory as parts of cost of                       goods sold.                                                            and                   Inventory…………………………………………………620,000                          Cost of goods sold…………………………................................620,000                   To record ending 12/31/X7 inventory balance based on a physical count.
   	b.	Cost of goods sold………………………………………3,380,000                  Inventory…………………………………………………...20,000                          Purchases……………………………………………………...3,400,000                  To record purchases as part of cost of goods sold and adjust inventory.
   	c.	Inventory………………………………………………….700,000                  Cost of goods sold………………………………………2,700,000                          Purchases………………………………………………………3,400,000                 To record purchases as part of cost of goods sold and adjust inventory.
   	d.	Cost of goods sold……………………………….……..4,020,000                          Inventory…………………………………...………….………...620,000                          Purchases………………………………………………………3,400,000                      To record purchases and beginning (1/1/X7) inventory as parts of cost of                   goods sold.                                                            and Inventory…………………………………………………700,000                          Cost of goods sold…………………………................................700,000                   To record ending 12/31/X7 inventory balance based on a physical count.

Answer 1