1. Under the perpetual method, the balance in the Inventory account: a. increases when customers return...

1. Under the perpetual method, the balance in the Inventory account: a. increases when customers return merchandise and the company returns merchandise to vendors. b. decreases when customers return merchandise and the company receives vendor purchase allowances. c. decreases when merchandise is sold and merchandise is purchased. d. increases when customers return merchandise and decreases when the company returns merchandise to vendors.

2. In its first year, FiCo, which uses the perpetual method and records purchases at net, buys two lots of sweaters, 1/10, n/30: one lot on March 10 for $4,000, paying the invoice on March 16; a second lot on June 25 for $2,000, paying the invoice on July 9. If no sweaters are sold from March through July, what is the balance in FiCo’s Inventory account on July 31? a. $6,000 b. $5,980 c. $5,960 d. $5,940

3. If your company records inventory using the perpetual net method, then: a. when a discount is not taken, the Inventory account is not affected. b. when a discount is taken, the Inventory account is affected. c. it is assumed the buyer will not take the discount. d. none of the above.

4. Your firm, which uses the perpetual method, purchases $10,000 of inventory, 2/10, n/30 You debit Inventory for $9,800 and credit Accounts Payable for $9,800. If the merchandise is paid for within the discount period, you will: a. debit to Accounts Payable for $9,800. b. debit to Purchase Discounts Lost for $200. c. credit to Purchase Discounts Lost for $200. d. credit to Inventory for $200.

5. Your company, which uses the perpetual method, sells inventory on account for $15,000. If the cost of the inventory is $9,000, you will: a. credit Inventory for $9,000. b. debit COGS for $9,000. c. credit Sales Revenue for $15,000. d. all of the above.

6. On August 6, your firm, which uses the perpetual method, orders $450 of inventory FOB shipping point. Freight is $50. On August 24, the merchandise arrives and you remit $500. For this transaction, you will: a. debit Inventory for $500 on August 24. b. debit Inventory for $450 on August 24. c. debit Purchases for $450 on August 6. d. debit Purchases for $500 on August 6.

Expert Solution

ekkarill92 answered 1 year ago

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