Marilee's Electronics Uses a Periodic Inventory System and the Average

question 139

Multiple Choice

Marilee's Electronics uses a periodic inventory system and the average cost retail method to estimate ending inventory and cost of goods sold. The following data is available from the company records for the month of June 2018: The average cost-to-retail percentage is:

• A) 52.2%.
• B) 61.5%.
• C) 56.8%.
• D) 55%.

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Definitions:

Sales Refund Payable

A liability account that holds funds reserved for future refunds to customers for returned goods.

Sales Returns

Goods returned by customers to the seller after the sale, which result in a reduction of revenue previously recognized.

Adjusting Entry

A journal entry made in accounting records at the end of an accounting period to allocate income and expenditure to the correct periods.

Periodic Inventory System

An inventory accounting system where the inventory count is physically conducted at specific intervals, typically at the end of an accounting period.