Question

26. Which of the following types of inventory accounts would be used by a wholesaler or retailer?

A) Merchandise inventory

B) Finished good inventory

C) Work in process inventory

D) Raw material inventory

27. Items should be reported as part of the company’s “inventory” at the year end, if they are?

A) Sold during period

B) Determined to be part of cost of goods sold

C) Purchased from a creditor, available for sale, and paid for the following year

D) Held in anticipation of an increase in market value

28. Which of the following accounts most likely would appear on the income statement of a merchandise company, but not on the income statement of service company?

A) Income tax expense

B) Cost of goods sold

C) Selling Expense

D) Administrative Expense

29. Tavelli Co. sold merchandise to Trapani Co. on account $17,000 terms 2/15 net 45. The cost of merchandise sold is $15,400. Tavelli Co. issued a credit memo for $1,750 for merchandise returned that originally cost $1,400. The Trapani Co. paid the invoice within the discount period. What is the amount of net sales from the above transaction?

A) $17,000

B) $14,945

C) $15,250   D) None of the above

Answer 1

26

Merchandise inventory account would be used by a wholesaler or retailer

Option A is correct

27

Purchased from a creditor, available for sale, and paid for the following year would be reported as part of the company’s “inventory”

Option C is correct

28

Cost of goods sold would appear on the income statement of a merchandise company, but not service company

Option B is correct

29

Sales                                                                              17000

Less: Sales returns and allowances (1750)

Less: Sales discount                                                (17000-1750)*2%

Net sales                                                                      14945

Option B is correct