1. The Birgini Company buys one unit of inventory for $77 in cash. This item is later sold for $109 on credit. What journal entry is recorded at the time of sale if a perpetual inventory system is used?

2.Ace Company reports Year One cost of goods sold as $324,000 using a periodic system. One inventory item was not recorded or counted. Ace had bought the item from Zebra for $6,000. Zebra shipped it on December 28, Year One, and Ace received it on January 5, Year Two. It was shipped FOB shipping point. Ace should have reported cost of goods sold as

3.Magic Carpets Inc. sells a full line of area rugs, from top quality to bargain basement. Economic conditions have hit the textile industry, and the accountant for Magic Carpets is concerned that the rug inventory might not be worth the amount Magic paid. The following is information about three lines of rugs.

Inventory Historical Sales Cost to No. In

Item Cost Price Sell Inventory

Highflyers $230 $350 $40 80

Midflight 150 220 25 125

Under the Reader 100 110 20 165

If Magic Carpets Inc. uses the lower of cost or net realizable value for individual types rugs, what is the loss in value on its inventory?

$13,200?

$1,650?

$14,850?

$3,300