1. Jill Co. uses a periodic inventory system. At the end of the recording period they discovered a $500,000 overstatement of ending inventory. If the error is discovered in the following year, what is the correct journal entry to correct the error?
   1. Debit Cash $500,000 and credit Inventory $500,000.
   2. Debit Retained Earnings $500,000 and credit Inventory $500,000.
   3. Debit Inventory $500,000 and credit Cash $500,000.
   4. Debit Inventory $500,000 and credit Retained Earnings $500,000.
   5. No correcting entry required as the error has self corrected
2. Sidneys Surfboard Company uses a periodic inventory system and discovers a $400,000 understatement of ending inventory for 2020? If the error is discovered in 2021, which of the following would be included in the adjusting journal entry?
   1. debit to inventory for $400,000
   2. credit to inventory for $400,000
   3. credit to cost of goods sold for $400,000
   4. debit to cost of goods sold for $400,000

3. Jane owns an antique furniture store, and each piece of furniture is unique with its own characteristics. Which method will she use for determining inventory costs?
   1. LIFO
   2. FIFO
   3. Weighted Average
   4. Specific Identification

4. Which of the following is not a reason the gross profit method might be used over the usual method of calculation?

1. It saves money by avoiding the expense of a physical inventory count
2. Provides a definite physical count of the inventory
3. Its useful for budgeting and forecasting
4. To estimate inventory for interim financial reporting.