Module 10 quiz

Alliah Company is purchasing a large inventory of tutus for their line of dance wear. If the tutus are sold and shipped with FOB shipping point shipping terms, when does ownership of the goods transfer from the seller to Atliah Company?

At the point of shipping; thus, the goods belong to Allah while in transit (if the shipping terms are FOB shipping point, ownership transfers at the shipping point to the buyer, who then owns the goods while they are in transit)

Freedom Rock Bicycles purchased inventory on account for 7000. The inventory inspector at Freedom Rock Bicycles did not approve of the quality of the inventory, and so returned it. Of Course, Freedom Rock Bicycles now does not have to pay for the inventory. Assuming that Freedom Rock Bicycles uses a periodic inventory system, which debit or credit is included in the journal entry necessary to record the return this inventory?

credit to purchase returns for 7000

Ridgeland Company uses a period inventory system. The company recently purchased inventory and the shipping costs were not included in the costs of inventory, so Ridgeland has to pay the shipping costs separately in cash. The shipping costs are 500. Which debit or credit is included in the journal entry necessary to record the cash payment of these shipping costs?

debit to Freight In for 500

Merrilton Company purchased inventory on account for 7,000. Merrilton Company uses a perpetual inventory system. Which debit or credit is included in the journal entry necessary to record the purchased of inventory on account?

debt to inventory for 7000

Oliver Costa owns a small business where he internally develops, manufactures, and sells decorative figurines directly to customer. To create his figurines, he owns assets including tools, machines, raw materials used to produce the figurines, and a large stock of the completed figurines themselves. As Costa prepares his balance sheet for the first time, he must classify his assets into their various appropriate categories. Which of Costa's assets is classified as inventory on the balance sheet?

the raw materials and the completed figurines (inventory is the name given to goods that are either manufactured or purchased for resale in the course of normal business. In this case, the raw materials and the completed figurines are considered inventory)