QUESTION 23 ABC Company purchased $10,000 of merchandise on account from XYZ Company; terms are 3/10, n/30, FOB shipping point.

QUESTION 23

1. ABC Company purchased $10,000 of merchandise on account from XYZ Company; terms are 3/10, n/30, FOB shipping point. If both companies use a perpetual inventory system, which company records the transportation, and which account is debited to record the amount of the transportation?
2. XYZ records with a debit to Merchandise Inventory
3. ABC records with a debit to Merchandise Inventory
4. XYZ records with a debit to Freight-In
5. XYZ records with a debit to Delivery Expense
6. ABC records with a debit to Delivery Expense
7. ABC records with a debit to Freight-In

2 points  

1. ABC Company purchased $10,000 of merchandise on account from XYZ Company; terms are 3/10, n/30, FOB destination. If both companies use a periodic inventory system, which company records the transportation, and which account is debited to record the amount of the transportation?
2. ABC records with a debit to Delivery Expense
3. XYZ records with a debit to Delivery Expense
4. XYZ records with a debit to Freight-In
5. ABC records with a debit to Freight-In
6. ABC records with a debit to Merchandise Inventory
7. XYZ records with a debit to Merchandise Inventory

2 points  

1. The following account balances appear on a year-end trial balance: Merchandise Inventory, $65,000; Purchases, $250,000; Sales, $600,000; Freight-in, $8,500; Sales Returns and Allowances, $7,000; and Purchase Returns and Allowances, $4,000. Ending inventory is $45,000. What is the cost of goods sold?
2. $325,500
3. $274,500
4. $318,500
5. $234,500
6. $867,500
7. $874,500

2 points  

1. In its first year, FiCo, which uses the perpetual method and records purchases at net, buys two lots of sweaters, both have terms of 1/10, n/30. One lot was purchased on March 10 for $4,000, paying the invoice on March 16. A second lot was purchased on June 25 for $2,000, paying the invoice on July 9. If no sweaters are sold from March through July, what is the balance in FiCo's Inventory account on July 31?
2. $5,980
3. $5,960
4. $5,940
5. $6,000

2 points  

1. Your company, which uses the perpetual method, does a year-end physical count of inventory. If there has been shrinkage, the adjustment will include:
2. a debit to a liability account.
3. a debit to an asset account.
4. a credit to an asset account.
5. a credit to an income statement account.
6. a credit to a liability account

2 points  

1. AcmeCo purchased inventory for $10,000, 2/10, n/30. At the time of purchase, AcmeCo debited Purchases for $9,800 and credited Account Payable for $9,800. If AcmeCo pays for the merchandise after the discount period has lapsed, they will:
2. debit Inventory for $200.
3. credit Inventory for $200
4. debit Purchase Discounts Lost for $200.
5. credit Purchase Discounts Lost for $200.
6. debit Accounts Payable for $10,000.

2 points  

1. ABC Company purchased $15,000 of merchandise on account from XYZ Company; terms are 1/15, n/eom, FOB destination. Assume both companies use a periodic inventory system and the buyer recorded the purchase at gross. If the invoice is paid within the discount period, how is the discount recorded by each company?
2. ABC debits Sales Discounts; XYZ credits Purchase Discounts
3. ABC debits Sales Discounts; XYZ credits Merchandise Inventory
4. ABC debits Purchase Discounts; XYZ credits Sales Discounts
5. ABC credits Merchandise Inventory; XYZ debits Sales Discounts
6. ABC debits Merchandise Inventory; XYZ credits Sales Discounts
7. ABC credits Purchase Discounts; XYZ debits Sales Discounts

2 points  

1. ABC Company purchased $10,000 of merchandise on account from XYZ Company; terms are 3/10, n/30, FOB destination. If ABC uses a periodic inventory system, the entry required to purchase the inventory at gross would include:
2. a debit to Purchases for $10,000 and a credit to Account Payable for $10,000
3. a debit to Purchases for $10,000; a credit to Purchase Discount for $300; and a credit to Account Payable for $9,700
4. a debit to Purchases for $9,700; a debit to Purchase Discount for $300; and a credit to Account Payable for $10,000