Information for Sandoval Skateshop Ltd. is presented in P6-3A. Use the same inventory data and assume that the company uses the perpetual inventory system.

In P6-3A

Sandoval Skateshop Ltd. reports the following inventory transactions for its skateboards for the month of April. The company uses a perpetual inventory system.

Instructions
(a) Determine the cost of goods sold and cost of ending inventory using average cost. (Use unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.)
(b) When the company counted its inventory at the end of April, it counted only 24 skateboards on hand. What journal entry, if any, should the company make to record this shortage?
(c) If the company had not discovered this shortage, identify what accounts would be overstated or understated and by what amount.

Transcribed Image Text:

Date Explanation Units Unit Cost Total Cost Apr. 1 Beginning inventory 30 15 (35) 20 (25) 20 $1,500 675 6 Purchases 9 Sales 14 Purchases 20 Sales 28 Purchases 45 40 800 35 700