Exam 3

Metlock's Market recorded the following events involving a recent purchase of inventory: Received goods for $110000, term 2/10, n/30 Returned $3300 of the shipping for credit Paid $600 freight on the shipment. Paid the invoice within the discount period As a result of these events, the company's inventory

Increased by $105166

Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account?

Inventory

In a period of increasing prices, which inventory flow assumption will result in the lowest amount to f income tax expense?

LIFO

A credit sale of $1600 is made on July 15, terms 2/10, net/30, on which a return of $200 is granted on July 18. What amount is received as payment in full of July 24?

$1372

Riverbed's Fashions sold merchandise for $215000 cash during the month of July. Returns that month totaled $5300. If the company's gross profit rate is 35%, Riverbed's will report monthly net sales revenue and cost of goods sold of

$209700 and $136305

At the beginning of the year, Concord had an inventory of $285000. During the year, the company purchased goods costing $1070000. If Concord reported ending inventory of $300000 and sales of $1720000, their cost of goods sold and gross profit rate would be

$770000 and 61.34%

Tidwell Company's goods in transit at December 31 is include sales made (1) FOB destination (2) FOB shipping point and purchases made (3) FOB destination (4) FOB shipping point Which items should be included in Tidwell's inventory at December 31?

(2) and (4)

Financial information is presented below: Operating expenses $41000 Sales revenue $238000 Cost of goods sold $173000 The gross profit rate would be

0.27

Financial information is presented below: Operating expenses $36000 Sales revenue $18100 Cost of goods sold $125000 The profit margin would be

0.69

Ivanhoe Corporation purchase $2100 of merchandise on account form Enterprise Company, terms 5/10, n/30. Ivanhoe and Enterprise both use periodic inventory systems. Enterprise's entry record this transaction is:

Accounts receivable 2100 Sales revenue. 2100

Under the perpetual inventory system, which of the following accounts would not be used?

Cost of goods sold Inventory Sales revenue Purchase - correct

A company using a perpetual inventory system that returns goods previously purchased on credit would

Debit accounts payable and credit inventory

When sales of merchandise are made for cash, the transaction may be recorded by the following entry:

Debit cash, credit sales revenue

Which inventory method generally results in costs allocated to ending inventory that will approximate their current cost?

FIFO

In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory?

FIFO method

When using a perpetual inventory system, why are discounts credited to Inventory?

The discounts reduce the cost of the inventory

The LIFO inventory method assumes that the cost of the latest units purchased is

The first to be allocated to cost of goods sold

An overstatement of ending inventory in one period results in

an understatement of net income of the next period

In a perpetual inventory system, cost of goods sold is recorded

each time a sale occurs

A merchandiser will earn an operating income of exactly $0 when

gross profit equals operating expenses