Problem 1. (a) "The steps in the accounting cycle for a merchandiser are different from the accounting cycle for a service enterprise." Do you agree or disagree? (b) Is the measurement of net income for a merchandiser conceptually the same as for a service enterprise? Explain.
Problem 2. When is cost of goods sold determined in a perpetual inventory system?
Problem 3: In the following separate mini cases, using a periodic inventory system, identify the item(s) designated by letter.
(a) Purchases -X- Y= Net purchases.
(b) Cost of goods purchased - Net purchases = X.
(c) Beginning inventory + X = Cost of goods available for sale.
(d) Cost of goods available for sale - Cost of goods sold = X.
Problem 4: "The key to successful business operations is effective inventory management." Do you agree? Explain.
Problem 5: Brim Hat Shop received a shipment of hats for which it paid the wholesaler $2,940. The price of the hats was $3,000 but Brim was given a $60 cash discount and required to pay freight charges of $80. In addition, Brim paid $130 to cover the travel expenses of an employee who negotiated the purchase of the hats. What amount will Brim record for inventory? Why?