Alternative Inventory Systems Uppercut Corporation purchases boxing gloves and markets them to local YMCAs and gymnasiums. Uppercut had on hand at the beginning of April an inventory of 50 units, previously purchased for $31 each. Transactions in April were as follows:

a. Prepare journal entries to record the transactions for April, assuming the company uses a perpetual inventory system.
What is the dollar amount of inventory shown on Uppercut’s books at the end of April?

b. A physical count of Uppercut’s inventory at the end of April reveals an ending inventory of 280 units costed at $31 each. Compute the company’s cost of goods sold for April assuming it uses a periodic inventory system.

c. What reasons might explain the discrepancy in the ending inventory balance between parts a and b? How would the discrepancy be treated in Uppercut’s accounting records if the company were using a perpetual inventory system?

Transcribed Image Text:

April Purchased 400 units of inventory at $30 each, on account. 5 8 Paid $400 freight charge on April 1 purchase. Sold 150 units at $50 each, on account. 9 20 Paid for inventory purchased on April 1. Received payment for 100 units sold on April 8.