ONLINE QUIZ #2
On July 15, Trekkies Company sells merchandise on account to Kirk's Industries for $3,000, terms 2/10, n/30. On July 20, Kirk's Industries returns merchandise worth $1,200 to Trekkies Company. On July 24, payment is received from Kirk's Industries for the balance due. What is the amount of cash received? $3,000 None of the answers are correct $1,800 $1,740 $1,764
$1,764 Trekkies Company would have debited Accounts Receivable for $3,000 initially. On July 20, Kirk's Industries returns merchandise for $1,200, resulting in a new Accounts Receivable balance of $1,800. If Kirk's Industries pays within the discount period (by July 25), it would receive a 2% discount of $36. Thus, the amount of cash Trekkies Company would receive is $1,764. The journal entry to record the discount and payment is: DR Cash $1,764 DR Sales Discounts $36 CR Accounts Receivable $1,800
Newco just started business, and uses the periodic method of inventory. It made the following four inventory purchases in June: June 1: 150 units at $390 per unit June 10: 200 units at $585 per unit June 15: 200 units at $630 per unit June 28: 150 units at $495 per unit A physical count of merchandise on June 30 reveals there are 200 units left on hand. Using FIFO, and rounding to the nearest dollar, the value of ending inventory on June 30 is: $105,750 $87,750 $99,000 None of the answers are correct $78,000
$105,750 Under FIFO, the earliest units are the first ones sold. So, if we are looking for ending inventory of 200 units, that means the latest units are the ones remaining. The cost of the 200 units of ending inventory of $105,750 is calculated as follows: 150 units (from June 28) at $495 per unit = $74,250 50 units (from June 15) at $630 per unit = $31,500
The inventory records for Starry Starry Night Company show the following: November 1: Beginning balance of 15 units at $8.00 per unit November 8: Purchase of 60 units at $8.60 per unit November 17: Purchase of 30 units at $8.40 per unit November 25: Purchase of 45 units at $8.80 per unit A physical count of inventory on November 30 reveals there are 50 units on hand. Assume a periodic inventory system is used. If LIFO is used, what is the value of ending inventory? $421 $438 $846 None of the answers are correct $863
$421 Under LIFO, the latest units are the first ones sold. So, if we are looking for ending inventory of 50 units, that means the earliest units are the ones remaining. The cost of the 50 units of ending inventory of $421 is calculated as follows: 15 units (from November 1) at $8.00 per unit = $120 35 units (from November 8) at $8.60 per unit = $301
On June 1, Logan Company purchased merchandise inventory with an invoice price of $5,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Logan Company pays on June 12? $5,000 $4,000 There is not enough information to determine the answer $4,900 $4,600
$5,000 Logan Company would have credited Accounts Payable for $5,000 initially. If it pays within the discount period (June 11), it would receive a 2% discount of $100. Because it paid on June 12, it is not entitled to the discount, and must be the entire balance of $5,000.
Cooper Logan Sports had the following inventory transactions occur during 2014: February 1: Purchased 18 units at $45/unit March 9: Purchased 31 units at $47/unit May 2: Purchased 22 units at $49/unit Cooper Logan Sports sold 51 units at $63 each. Assuming a periodic inventory system was used, and there is no beginning inventory, what is the company's gross profit using FIFO? (Round to the nearest whole dollar.) $772 None of the answers are correct $2,365 $2,441 $848
$848 Total sales are $3,213 (51 units x $63 per unit). Cost of goods sold, using LIFO, means the latest units are the first units sold. So, cost of goods sold of $2,365 is calculated as follows: 18 units (February 1) at $45 per unit = $810 31 units (March 9) at $47 per unit = $1,457 2 units (May 2) at $49 per unit = $98 Gross profit is calculated as sales minus cost of goods sold, or $848.
Use the following inventory information: November 1: Beginning inventory (15 units @ $8.00/unit) November 8: Purchase (60 units @ $8.60/unit) November 17: Purchase (30 units @ $8.40/unit) November 25: Purchase (45 units @ $8.80/unit) A physical count of inventory on November 30 reveals there are 50 units on hand. Assuming a periodic inventory system is used, what is the cost of goods sold for November using the average cost method? $860 None of the answers are correct $845 $856 $800
$856 Average cost per unit of $8.56 is calculated as follows: Total cost of inventory: $1,284 (multiply out each date's inventory cost) Total units of inventory: 150 units (add up total inventory by date) Since 50 units remain in ending inventory, and 150 units of inventory existed in November, that means 100 units were sold. So, cost of goods sold must be $856 (100 units x $8.56 average cost per unit).
The collection of a $900 account after the 2% discount period has passed will result in a debit to: Cash for $882 Cash for $900 Accounts Receivable for $900 Sales Returns & Allowances for $18 Sales Discounts for $18
Cash for $900 The seller would have debited Accounts Receivable for $900 initially. If its customer pays within the discount period, it would receive a 2% discount of $18. But, the customer pays too late, and is not entitled to the discount. So, the customer would need to pay the full amount of $900. The journal entry to record the payment is: DR Cash $900 CR Accounts Receivable $900
Tertiary Tables, Inc., just started business, and purchases three desks for its inventory: First desk for $890; second desk for $840; third desk for $810. If two desks were sold during the period, and the company used the LIFO inventory method, cost of goods sold for the period would be how much greater or less than if the FIFO inventory method had been used? Cost of goods sold under FIFO would be $80 greater Cost of good sold under FIFO would be $80 less Cost of goods sold would be the same under LIFO and FIFO There is not enough information to determine the answer Cost of goods sold under LIFO would be $80 greater
Cost of goods sold under FIFO would be $80 greater Under FIFO, the two desks sold are $890 and $840, for a total cost of goods sold of $1,730. Under LIFO, the two desks sold are $810 and $840, for a total cost of goods sold of $1,650. Thus, under FIFO, cost of goods sold would be $80 greater than if LIFO was used.
Sue Flay's Cake Shop sells $1,500 of red velvet cupcakes to a customer on terms of 2/10, n 30. If the customer pays within the discount period, the entry or entries to record this payment on the books of Sue Flay's Cake Shop would include: (choose the most correct answer) Debit to Accounts Receivable for $1,500 Debit to Cash for $1,500, a credit to Sales Discounts for $30, and a credit to Accounts Receivable for $1,470 Debit to Cash for $1,500 Credit to Sales Discounts for $30 Debit to Sales Discounts for $30, and a credit to Accounts Receivable for $1,500
Credit to Sales Discounts for $30 Sue Flay's Cake Shop would have debited Accounts Receivable for $1,500 initially. If its customer pays within the discount period, it would grant a 2% discount of $30. Thus, the amount of cash it would receive is $1,470. The journal entry to record the discount and payment is: DR Cash $1,470 DR Sales Discounts $30 CR Accounts Receivable $1,500
Beginning inventory plus purchases, less cost of goods sold, equals: Ending inventory Net purchases Sales None of the answers are correct Total goods purchased
Ending inventory Cost of goods sold equals: Beginning inventory Cost of goods purchased Less: Ending inventory Thus, if we move cost of goods sold to the other side of the equation, then the formula would result in ending inventory.
Cost of goods sold can be computed from which of the following equations? Beginning Inventory - Cost of Goods Purchased + Ending Inventory Beginning Inventory + Cost of Goods Purchased + Ending Inventory Net Sales - Gross Profit Sales - Cost of Goods Purchased + Beginning Inventory - Ending Inventory None of the answers are correct
Net Sales - Gross Profit The income formula is: Net Sales Less: Cost of Goods Sold Equals: Gross Profit The formula to calculate Cost of Goods Sold is: Beginning inventory Cost of goods purchased Less: Ending inventory
Sales Returns and Allowances account is credited if a customer: Takes advantage of the discount period Receives a credit for merchandise of inferior quality None of these situations would require Sales Returns & Allowances to be credited Returns defective merchandise Purchases goods from the seller
None of these situations would require Sales Returns & Allowances to be credited When a customer returns defective merchandise, or receives a credit of inferior merchandise, Sales Returns & Allowances is debited, not credited. When a customer pays within a discount period, Sales Discounts is debited. When a customer purchases goods from a seller, Sales is credited.
The Inventory account would be used in each of the following journal entries except: Goods purchased for resale to customers on account Payment of freight on goods purchased for resale to customers Return of goods to the seller which had been purchased for resale to customers Payment for goods not for resale to customers within the discount period The inventory account is required for each of these entries
Payment for goods not for resale to customers within the discount period For goods purchased for resale to customers, you would: DR Inventory CR Cash (or Accounts Payable) For returns of goods to a seller, you would: DR Cash (or Accounts Payable) CR Inventory For payment of freight costs on goods purchased from a seller, you would: DR Inventory CR Cash For payment of goods not for resale to customers, you would not include it in Inventory. Inventory is only used for those goods which are for resale to customers.
Goods in transit are not included in the inventory of the buyer when the: Goods in transit are always included in the buyer's inventory Terms of sale are FOB shipping point Terms are FOB selling point Terms are FOB arrival Terms of sale are FOB destination
Terms of sale are FOB destination If the goal is for a buyer not take title to goods in transit, then the shipment must be done FOB destination. If the terms of FOB shipping point, then the buyer would take title to those goods as soon as the seller has delivered those goods to the shipper.
If goods in transit are shipped FOB shipping point: The shipper has legal title to the goods while the goods are in transit The seller has legal title to the goods until they are delivered to the buyer The buyer has legal title to the goods immediately when they leave the seller's warehouse The buyer does not have legal title to the goods until they are delivered The buyer has legal title to the goods even if they have not yet been delivered to the buyer yet
The buyer has legal title to the goods even if they have not yet been delivered to the buyer yet Under FOB shipping point, the buyer owns the goods as soon as the seller delivers the goods to the shipper. Under FOB destination, the buyer owns the goods when they arrive at the destination, not when the seller delivers the goods to the shipper.
