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Boston Bait Shop uses a periodic inventory system. At December 31, year 2, the accounting records include the following information: A complete physical inventory was taken at December 31. Year

Boston Bait Shop uses a periodic inventory system. At December 31, year 2, the accounting records include the following information:

A complete physical inventory was taken at December 31. Year 2 indicates merchandise costing $3000 remains in stock.

a. how are the amounts of beginning and ending inventory determined?

b. Compute the amount of cost of goods sold in year 2.

c. Prepare two closing entries at December 31. Year 2: the first to create a cost of goods sold account with the appropriate balance and the second to bring the inventory account up to date.

d. Prepare a partial income statement showing the shop's gross profit for the year. 

e. Describe why a company such as Boston Bait Shop would use a periodic inventory system rather than a perpetual inventory system. 

May 15 2021 View more View Less

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