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Northfield Inc., an upscale electronics wholesaler, uses a periodic inventory system to account for the...

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Finance

Northfield Inc., an upscale electronics wholesaler, uses a periodic inventory system to account for the goods available for sale. Northfields CFO, Bob Garey, feels that the periodic inventory system that the company uses is too inefficient. The company often runs out of the companys best - selling merchandise and is unable to fulfill orders. In addition, Northfield shuts down operations twice a year to perform a physical inventory. Bob is considering purchasing a perpetual inventory system module for his accounting software to replace the periodic inventory system.

Discussion question:

1.) A. How would switching from a periodic inventory system to a perpetual inventory system benefit Northfield?

B. Will a perpetual inventory system eliminate the need for Northfield to perform a physical inventory? Please explain your answer.

C. What are the benefits that Bob must consider in retaining that periodic inventory system?

Also, please address the following:

** A manufacturer shipped merchandise to a retailer on a consignment basis. If the merchandise is unsold at the end of the period, in whose inventory should the merchandise be included?

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