acc 7

Widget Company started the month with 10 gadgets in its Inventory that cost $5 each. During the month, Widget bought 50 more gadgets that cost $6 each. At the end of the month, Widget counted its inventory and found that 8 gadgets remained unsold. If Widget uses FIFO, its Cost of Goods Sold for the month is

(10 gadgets x $5) + (42 gadgets x $6) = $302

Boopsie Agin, the company's bookkeeper, recorded the purchase of merchandise on account with a debit to Cost of Goods Sold and a credit to Cash. As a result

Liabilities are understatedStockholders' equity is understatedAssets are understated

In a perpetual inventory system, which of the following statements are true

The seller should record freight-out as a selling expense, the purchaser should record freight-in as an asset, Inventory

in a perpetual system, the entry to record the sale of merchandise to a customer on account would include a

credit to inventory and debit to cost of goods sold

When inventory is sold, the cost of inventory is recognized as an

expense

After each sale of merchandise to a customer, both inventory and cost of goods sold are

kept up-to-date in a perpetual system

In a perpetual inventory system, the journal entry to record the payment of cash for the shipping costs of purchased merchandise will cause

one asset to increase and another asset to decrease

Inventory is expensed when

sold

Bijoux Company uses a perpetual inventory system. Its bookkeeper properly recorded a $5,000 sale on account, but forgot to record the related cost of the sale of $3,000. As a result of this error

total assets will be too highandnet income will be too high