Acct 350: Under and Over Statements
1. Alpha erroneously failed to record a purchase discount for inventory that had been
purchased during the year using the periodic inventory system. ( 1) contra expense
2. Alpha failed to record the prepayment of one year of rent paid. Alpha also failed to
record an AJE at the end of the year when there was still one month of rent remaining
on the lease. ( 1)
3. Alpha failed to record the return of merchandise for cash from a customer. Alpha uses
the periodic inventory system. ( 3) sales returns contra revenue account - debit
4. In the third month of the year, Alpha paid cash for one year of rent and recorded it as an
expense. Alpha also failed to record the required AJE. (3)
5. Alpha failed to record the return of inventory for a credit to the manufacturer ( periodic
inventory system). ( 5)
6. Alpha recorded the prepayment of one year of rent as a debit to rent expense and a
credit to accounts payable. Alpha failed to record an AJE at the end of the year when
there was still two months of rent remaining on the lease. (5)
7. Alpha paid a dividend to shareholders (to satisfy dividends payable) but erroneously
recorded it as a cash paid to satisfy and account payable. (5)
8. Alpha sold merchandise to Beta on credit with terms F.O.B Destination. As of December
31, the merchandise had not yet been received by Beta. Alpha recorded the sale and did
not count the merchandise in the ending inventory (periodic system). (5)
9. Alpha failed to record a cash refund from a vendor for the return of inventory that had
been purchased by Alpha during the year using the periodic inventory system. ( 6)
10. Alpha failed to record the purchase of inventory on account using the periodic inventory
system. (6) Solutions to Under and Over Statements
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1
2
3
4
5
6
7
8
9 O
O
U
N
O
N
O
U 10 N Assets
O /U N
N
N
O
O
N
N
N
U Liabilities
O/ N O
O
U
U
U
N
O
U
O Net Income
U/ U

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