Question

Question 21 (2.5 points)

Toss Inc. purchased inventory of $600 on March 9, 2013 and received the invoice on March 10, 2013 with terms 1/8, n/45. Toss uses a periodic inventory system. The entry to record the payment made by Toss on March 15, 2013 would include:

Question 21 options:

	a debit to account receivable.
	a credit to inventory.
	a debit to cash.
	a credit to purchase discount.
	a credit to accounts payable.

Question 22 (2.5 points)

The process of adding cost to an asset account is termed as:

Question 22 options:

	conservatism.
	matching.
	capitalization.
	revenue recognition.
	consistency.

Question 23 (2.5 points)

On June 1, Felix Company purchased 10 umbrellas for $5 each. On June 11, the company purchased additional 10 umbrellas for $7 each. On June 20, it sold 9 umbrellas for $20 each. If Felix is using the LIFO method, what would be its ending inventory on June 20?

Question 23 options:

	$63
	$75
	$66
	$57
	$50

Question 24 (2.5 points)

Moss Inc. is a dealer in art supplies. On February 10, 2013, Moss purchased $600 worth of watercolors and received the invoice on February 11, 2013 with terms 2/10 n/35. Moss uses a perpetual inventory system. The entry to record the payment made by Moss on February 15, 2013 would include:

Question 24 options:

	a debit to account receivable.
	a credit to inventory.
	a debit to cash.
	a credit to purchase discount.
	a credit to accounts payable.

Answer 1

21

As payment is made within 8 days, Toss would be entitled to purchase discount.

The entry to record the payment made by Toss on March 15, 2013 would include a credit to purchase discount.

Option D is correct

22

The process of adding cost to an asset account is termed as capitalization.

Option C is correct

23

Ending inventory on June 20 = (10*5)+(10-9)*7= $57

Option D is correct

24

As payment is made within 10 days, Moss would be entitled to purchase discount.

Purchase discount under perpetual inventory system is recorded in inventory account.

The entry to record the payment made by Moss on February 15, 2013 would include a credit to inventory.

Option B is correct