Assume that Gallant Company uses a periodic inventory system and has these account balances:...
Question:
Assume that Gallant Company uses a periodic inventory system and has these account balances: Purchases $482,780; Purchase Returns and Allowances $12,670; Purchase Discounts $9,080; and Freight-In $16,200.
Gallant Company has beginning inventory of $62,300, ending inventory of $87,170, and net sales of $739,570.
Determine the amounts to be reported for cost of goods sold and gross profit.
Periodic Inventory System:
The periodic inventory system is a system used by smaller retailers to account for their inventory assets and Cost of Goods Sold expenses. It is less complicated than the perpetual system because the Cost of Goods Sold is not recorded for each sales transaction, it is rather calculated at the end of each reporting period.
Answer and Explanation: 1
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We use a formula to calculate the Cost of Goods Sold that adds net purchases to beginning inventory to get to the cost of goods available for sale,...
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Periodic Inventory System: Definition, Advantages & Examples
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