Triple Creek Hardware Store currently uses a periodic inventory system Kevin Carlton, the owner is considering the purchase of a computer system that would make it feasible to switch to a perpetual inventory system. Kevin is unhappy with the periodic inventory system because it does not provide timely information on inventory levels Kevin has noticed on several occasions that the store runs out of good selling items while too many poor selling items are on hand. Kevin is also concerned about lost sales while a physical inventory is being taken. Triple Creek Hardware currently takes a physical inventory twice a year. To minimize distractions, the store is closed on the day inventory is taken. Kevin believes that closing the store is the only way to get an accurate inventory count. Will switching to a perpetual inventory system strengthen Triple Creek Hardware's control over inventory items? Will switching to a perpetual inventory system eliminate the need for a physical inventory count? Explain. Hardcase Luggage Shop is a small retail establishment located in a large shopping mall. This shop has implemented the following procedures regarding inventory items. a. Because the shop carries mostly high-quality, designer luggage, all inventory items are tagged with a control dove that activates an alarm if a tagged items is removed from the store. b. Because the display area of the store is knitted. only a sample of each piece of hag gage is kept on the selling floor. Whenever a customer selects a piece of luggage, the salesclerk gets the appropriate piece from the store's stockroom. Because all salesclerks need access to the stockroom it is not locked. The stockroom is adjacent to the break room used by all mall employees. c Whenever Hardcase Luggage Shop receives a shipment of new inventory, the items are taken directly to the stockroom. Hardcase's accountant uses the vendor's invoice to record the amount of inventory received. State whether each of these procedures to appropriate or inappropriate. If it is inappropriate, state why. Beginning inventory, purchases and sales data for portable DVD players are as follows: The business maintains a perpetual inventory system, coating by the first in first out method. a. Determine the coat of the merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 4. b. Based upon the preceding data, would you expect the inventory to be higher or lower using the last in first out method? Assume that the business in Exercise 7-3 maintains a perpetual inventory system, costing by the last-in, first-out method. Determine the cost of merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form Illustrated in Exhibit 5
