1. Johnson Jeans uses the perpetual system for managing its inventory. At the end of 2021, the accounting records of Johnson Jeans showed $51,200 of inventory. Johnson Jeans counted its inventory on December 31, 2021 and counted $48,900 on hand.

• Johnson Jeans should fire its bookkeeper, because the accounting records are wrong.

• Johnson Jeans should record cost of goods sold of $48,900.

• Johnson Jeans has $2,300 of shrinkage.

• Johnson Jeans should record cost of goods sold of $51,200.

2.

Sally Pizza is a new business that opened in 2020. Sally Pizza allows business customers to charge on account for catering services. Sally Pizza recorded its year-end estimate of $1,600 on December 31, 2020. Sally Pizza did a $400 write-off on January 4, 2021 due to a customers bankruptcy. What was Sally Pizzas allowance for doubtful accounts on January 4, 2021 after the write-off?

• $1,200

• $2,000

• $400

• $1,600

3.

The inventory records for Johnson Company reflected the following:

Beginning inventory @ May 1	1,400 units @ $4.40
First purchase @ May 7	1,500 units @ $4.60
Second purchase @ May 17	1,700 units @ $4.70
Third purchase @ May 23	1,300 units @ $4.80
Sales @ May 31	4,500 units @ $6.30

What is the amount of cost of goods sold assuming the LIFO cost flow method?

• $20,700

• $21,130

• $19,800

• $21,600