Question 13 Excess inventory results in all of the following except a. increased storage expense b. lost sales c. tied-up funds that could be used to improve operations d. increased risk of loss due to damage 2 points Question 14 Determine the total value of the merchandise using net realizable value. Item Quantity Selling Price Commission Doll 10 $7 $2 Horse 5 9 3 a. $25 b. $115 c. $80 d. $35 2 points Question 15 When using a perpetual inventory system, the journal entry to record the cost of merchandise sold is: a. debit Cost of Merchandise Sold; credit Sales b. debit Cost of Merchandise Sold; credit Merchandise Inventory c. debit Merchandise Inventory; credit Cost of Merchandise Sold d. No journal entry is made to record the cost of merchandise sold. 2 points Question 16 During the taking of its physical inventory on December 31, 2014, Barry’s Bike Shop incorrectly counted its inventory as $350,000 instead of the correct amount of $280,000. The effect on the balance sheet and income statement would be a. assets overstated by $70,000; retained earnings understated by $70,000; and net income statement understated by $70,000 b. assets and retained earnings overstated by $70,000; and net income understated by $70,000 c. assets overstated by $70,000; retained earnings understated by $70,000; and no effect on the income statement d. assets, retained earnings, and net income all overstated by $70,000 2 points Question 17 Emma Co. sold to Isabella Co. merchandise on account FOB shipping point, 2/10, net 30, for $15,000. Emma Co. prepaid the $750 shipping charge. Using the perpetual inventory method, which of the following entries will Isabella Co. make to record payment of the merchandise if Isabella Co. pays within the discount period? a. Accounts Payable—Emma Co., debit $15,000; Cash, credit $15,000 b. Accounts Payable—Emma Co., debit $15,450; Cash, credit $15,450 c. Accounts Payable—Emma Co., debit $15,750; Merchandise Inventory, debit $300; Cash, credit $16,050 d. Accounts Payable—Emma Co., debit $15,000; Freight-In, debit $750; Cash, credit $15,750 2 points Question 18 Pierce Company sold to Stanton Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000. Pierce prepaid the $500 shipping charge. Which of the following entries does Pierce make to record this sale? a. Accounts Receivable—Stanton, debit $19,600; Sales, credit $19,600, and Accounts Receivable—Stanton, debit $500; Cash, credit $500 b. Accounts Receivable—Stanton, debit $20,000; Sales, credit $20,000, and Delivery Expense, debit $500; Cash, credit $500 c. Accounts Receivable—Stanton, debit $20,100; Sales, credit $20,100 d. Accounts Receivable—Stanton, debit $20,000; Sales, credit $20,000 2 points Question 19 A company using the periodic inventory system has merchandise inventory costing $210 on hand at the beginning of the period. During the period, merchandise costing $635 is purchased. At year-end, merchandise inventory costing $160 is on hand. The cost of merchandise sold for the year is a. $795 b. $685 c. $265 d. $635 2 points Question 20 A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $3,600; Freight-In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The cost of merchandise purchased is equal to a. $8,420 b. $9,070 c. $12,670 d. $17,230 2 points Question 21 The inventory system employing accounting records that continuously disclose the amount of inventory is called a. periodic b. physical c. retail d. perpetual Question 11 The following lots of a particular commodity were available for sale during the year: Beginning inventory 10 units at $30 First purchase 25 units at $32 Second purchase 30 units at $34 Third purchase 10 units at $35 The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year rounded to nearest dollar according to the average cost method? a. $620 b. $690 c. $659 d. $655

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13-12-2022
Business

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Question 13 Excess inventory results in all of the following except a. increased storage expense b. lost sales c. tied-up funds that could be used to improve operations d. increased risk of loss due to damage 2 points Question 14 Determine the total value of the merchandise using net realizable value. Item Quantity Selling Price Commission Doll 10 $7 $2 Horse 5 9 3 a. $25 b. $115 c. $80 d. $35 2 points Question 15 When using a perpetual inventory system, the journal entry to record the cost of merchandise sold is: a. debit Cost of Merchandise Sold; credit Sales b. debit Cost of Merchandise Sold; credit Merchandise Inventory c. debit Merchandise Inventory; credit Cost of Merchandise Sold d. No journal entry is made to record the cost of merchandise sold. 2 points Question 16 During the taking of its physical inventory on December 31, 2014, Barry’s Bike Shop incorrectly counted its inventory as $350,000 instead of the correct amount of $280,000. The effect on the balance sheet and income statement would be a. assets overstated by $70,000; retained earnings understated by $70,000; and net income statement understated by $70,000 b. assets and retained earnings overstated by $70,000; and net income understated by $70,000 c. assets overstated by $70,000; retained earnings understated by $70,000; and no effect on the income statement d. assets, retained earnings, and net income all overstated by $70,000 2 points Question 17 Emma Co. sold to Isabella Co. merchandise on account FOB shipping point, 2/10, net 30, for $15,000. Emma Co. prepaid the $750 shipping charge. Using the perpetual inventory method, which of the following entries will Isabella Co. make to record payment of the merchandise if Isabella Co. pays within the discount period? a. Accounts Payable—Emma Co., debit $15,000; Cash, credit $15,000 b. Accounts Payable—Emma Co., debit $15,450; Cash, credit $15,450 c. Accounts Payable—Emma Co., debit $15,750; Merchandise Inventory, debit $300; Cash, credit $16,050 d. Accounts Payable—Emma Co., debit $15,000; Freight-In, debit $750; Cash, credit $15,750 2 points Question 18 Pierce Company sold to Stanton Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000. Pierce prepaid the $500 shipping charge. Which of the following entries does Pierce make to record this sale? a. Accounts Receivable—Stanton, debit $19,600; Sales, credit $19,600, and Accounts Receivable—Stanton, debit $500; Cash, credit $500 b. Accounts Receivable—Stanton, debit $20,000; Sales, credit $20,000, and Delivery Expense, debit $500; Cash, credit $500 c. Accounts Receivable—Stanton, debit $20,100; Sales, credit $20,100 d. Accounts Receivable—Stanton, debit $20,000; Sales, credit $20,000 2 points Question 19 A company using the periodic inventory system has merchandise inventory costing $210 on hand at the beginning of the period. During the period, merchandise costing $635 is purchased. At year-end, merchandise inventory costing $160 is on hand. The cost of merchandise sold for the year is a. $795 b. $685 c. $265 d. $635 2 points Question 20 A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $3,600; Freight-In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The cost of merchandise purchased is equal to a. $8,420 b. $9,070 c. $12,670 d. $17,230 2 points Question 21 The inventory system employing accounting records that continuously disclose the amount of inventory is called a. periodic b. physical c. retail d. perpetual Question 11 The following lots of a particular commodity were available for sale during the year: Beginning inventory 10 units at $30 First purchase 25 units at $32 Second purchase 30 units at $34 Third purchase 10 units at $35 The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year rounded to nearest dollar according to the average cost method? a. $620 b. $690 c. $659 d. $655

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