Q: A company purchases merchandise for $$2,500 with credit terms 2/10, n/30. The company returns 200 of $$defective merchandise and pays the remaining balance within the discount period. What is the cash payment amount?

$$2,500 - 200$$ = $$2,300; 2$$,300 \times 2\% = $$46; 2$$,300 - $$46 = \boxed{\2$$,254}$

Q: Given the following inventory data: Beginning inventory 20 units at $$100, First purchase 30 units at 110$$, Second purchase 50 units at $120. What is the weighted average cost per unit?

$$\frac{(20 \times 100) + (30 \times 110) + (50 \times 120)}{20 + 30 + 50} = \frac{2,000 + 3,300 + 6,000}{100} = \frac{11,300}{100} = \boxed{\113$$}$

Q: A company sells 60 units at $$200 each. Weighted average cost per unit is 150. $$What is the cost of goods sold and gross profit?

COGS: $$60 \times 150 = \boxed{\9$$,000}$$; Gross Profit: 60$$ \times 200 - 9,000 = $$12,000 - 9,000 = \boxed{\3$$,000}$

Q: Using FIFO, a company has: Beginning inventory 10 units at $$100, First purchase 20 units at 110$$, Second purchase 30 units at $120. If 35 units are sold, what is the cost of goods sold?

COGS: (10 \times 100) + (20 \times 110) + (5 \times 120) = 1,000 + 2,200 + 600 = \boxed{\$$3,800}$$

Question 1

A company purchases merchandise for $$2,500 with credit terms 2/10, n/30. The company returns 200 of $$defective merchandise and pays the remaining balance within the discount period. What is the cash payment amount?

Accepted Answer

$$2,500 - 200$$ = $$2,300; 2$$,300 	imes 2\% = $$46; 2$$,300 - $$46 = \boxed{\2$$,254}$

Question 2

Which journal entry correctly records a purchase return of $400 under a perpetual inventory system from the buyer's perspective?

Accepted Answer

Debit Accounts Payable $$400; Credit Merchandise Inventory 400$$

Question 3

A company sells merchandise for $$8,000 on account. The merchandise cost 3$$,200. Which compound journal entries are required under a perpetual inventory system?

Accepted Answer

Entry 1: Debit Accounts Receivable $$8,000; Credit Sales Revenue 8$$,000. Entry 2: Debit Cost of Goods Sold $$3,200; Credit Merchandise Inventory 3$$,200.

Question 4

A customer returns merchandise originally sold for $$600. The inventory cost was 250. $$The merchandise is resalable. What are the correct journal entries from the seller's perspective?

Accepted Answer

Entry 1: Debit Sales Returns and Allowances $$600; Credit Accounts Receivable 600. $$Entry 2: Debit Merchandise Inventory $$250; Credit Cost of Goods Sold 250.$$

Question 5

A company’s sales revenue is $$10,000, sales returns and allowances are 300$$, sales discounts are $$100, and cost of goods sold is 6$$,000. What is the gross profit?

Accepted Answer

$$10,000 - 300$$ - $$100 = 9$$,600; $$9,600 - 6$$,000 = \boxed{\$$3,600}$$

Question 6

A company purchases inventory for $$1,200, pays 50 $$for freight-in, returns $$100, and receives a 24 $$purchase discount. What is the net cost of inventory purchased?

Accepted Answer

$$1,200 - 100$$ - $$24 + 50$$ = \boxed{\$$1,126}$$

Question 7

Under FOB Shipping Point, which account does the buyer use to record freight costs?

Accepted Answer

Merchandise Inventory

Question 8

A company’s book inventory is $$7,000, but a physical count shows 6$$,800. What is the amount of inventory shrinkage, and what is the correct journal entry?

Accepted Answer

$$7,000 - 6$$,800 = \boxed{\$$200}$$; Debit Cost of Goods Sold $$200; Credit Merchandise Inventory 200.$$

Question 9

Which accounting principle requires that expenses be recorded in the same period as the revenue they help generate?

Accepted Answer

Matching Principle

Question 10

Given the following inventory data: Beginning inventory 20 units at $$100, First purchase 30 units at 110$$, Second purchase 50 units at $120. What is the weighted average cost per unit?

Accepted Answer

$$\frac{(20 	imes 100) + (30 	imes 110) + (50 	imes 120)}{20 + 30 + 50} = \frac{2,000 + 3,300 + 6,000}{100} = \frac{11,300}{100} = \boxed{\113$$}$

Question 11

A company sells 60 units at $$200 each. Weighted average cost per unit is 150. $$What is the cost of goods sold and gross profit?

Accepted Answer

COGS: $$60 	imes 150 = \boxed{\9$$,000}$$; Gross Profit: 60$$ 	imes 200 - 9,000 = $$12,000 - 9,000 = \boxed{\3$$,000}$

Question 12

Using FIFO, a company has: Beginning inventory 10 units at $$100, First purchase 20 units at 110$$, Second purchase 30 units at $120. If 35 units are sold, what is the cost of goods sold?

Accepted Answer

COGS: (10 	imes 100) + (20 	imes 110) + (5 	imes 120) = 1,000 + 2,200 + 600 = \boxed{\$$3,800}$$

Question 13

Inventory has a historical cost of $$7,000 and a current market value of 6$$,500. According to the lower-of-cost-or-market rule, what value should be reported on the balance sheet?

Accepted Answer

$6,500

Question 14

If ending inventory is overstated by $1,000, what is the effect on cost of goods sold and gross profit?

Accepted Answer

COGS is understated; Gross Profit is overstated

Question 15

Which of the following is a book-side adjustment in a bank reconciliation?

Accepted Answer

Bank service charge

Question 16

A company’s petty cash fund is $$200. Receipts total 150. $$Actual cash remaining is $45. What is the cash shortage?

Accepted Answer

Expected cash: $$200 - 150$$ = $$50; Shortage: 50$$ - $$45 = \boxed{\5$$}$

Question 17

A company’s Accounts Receivable is $$25,000 and Allowance for Bad Debts is 2$$,000. What is the net Accounts Receivable?

Accepted Answer

$$25,000 - 2$$,000 = \boxed{\$$23,000}$$

Question 18

A company’s credit sales are $120,000. Estimated uncollectible percentage is 2%. What is the adjusting entry for bad debts expense using the percent-of-sales method?

Accepted Answer

$$120,000 	imes 2\% = \boxed{\2$$,400}$$; Debit Bad Debts Expense 2$$,400; Credit Allowance for Bad Debts $2,400.

Question 19

A 60-day note is issued on March 15. What is the maturity date?

Accepted Answer

March 15 not counted; March 16–31 = 16 days; April = 30 days; May = 14 days; Maturity date: May 14.

Question 20

A company lends $10,000 on a 90-day note at 9% interest. Using a 360-day year, what is the interest revenue?

Accepted Answer

$$10,000 	imes 9\% 	imes \frac{90}{360} = \boxed{\225$$}$

Merchandise Inventory, Inventory Costing, Cash & Internal Controls, and Receivables: Principles of Accounting Study Guide

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