15 freight out is an addition to the merchandise inventory account if the seller use 4307082

15 freight out is an addition to the merchandise inventory account if the seller use 4307082

15) Freight out is an addition to the Merchandise Inventory account if the seller uses the perpetual inventory system.

16) On January 21st, 2014, Bessant merchandisers, received merchandise from Mullies Inc. On that date, it found a few of these goods to be damaged. On January 22, it returned the damaged goods to the seller. Such returns will be treated as ________ by Bessant.

A) purchase returns

B) sales returns

C) purchase allowances

D) sales allowances

17) Under the perpetual inventory system, when a wholesaler returns the goods purchased on account, the ________ account is credited.

A) Accounts Receivable

B) Merchandise Inventory

C) Cost of Goods Sold

D) Accounts Payable

18) The term “Freight out” refers to:

A) transportation costs on purchases.

B) cost of inventory purchased.

C) costs that are not actually paid in cash.

D) transportation costs on sales.

19) Procession Groceries, a famous grocery merchandiser, purchased goods and paid transportation to bring them to the company warehouse. The transportation cost is known as:

A) freight out.

B) selling expense

C) freight in.

D) cost of goods sold.

20) What does “2/10” mean, with respect to “credit terms of 2/10, n/30”?

A) A discount of 2% will be allowed if invoice is paid within 10 days from the date of the invoice .

B) An interest of 2% will be charged if invoice is paid after 10 days from the date of invoice.

C) A discount of 10% will be allowed if invoice is paid within 2 days from the date of invoice.

D) An interest of 10% will be charged if invoice is paid after 2 days.

21) Which of the following entries would be made to record the purchase of inventory on account if a company uses the perpetual inventory system?

A) a debit to Purchases and a credit to Accounts Payable

B) a debit to Accounts Payable and a credit to Purchases

C) a debit to Merchandise Inventory and a credit to Accounts Payable

D) a debit to Accounts Payable and a credit to Merchandise Inventory

22) A company that uses the perpetual inventory system purchases inventory for $65,000 on account, with terms of 2/10, n/30. Which of the following is the journal entry to record the payment made within 10 days?

A) a debit to Accounts payable for $65,000 and a credit to Cash for $65,000 and a debit to Merchandise Inventory for $1,300

B) a debit to Accounts payable for $65,000, a credit to Merchandise Inventory for $1,300, and a credit to Cash for $63,700

C) a debit to Merchandise Inventory for $1,300, a debit to Accounts Payable for $65,000 and a credit to Cash for $66,300

D) a debit to Accounts Payable for $63,700, a debit to Merchandise Inventory for $1,300 and a credit to Cash for$65,000

23) A company that uses the perpetual inventory system purchased inventory for $1,000,000 on account with terms of 4/7, n/20. Which of the following correctly records the payment made 15 days after the date of invoice?

A)

Cash

1,000,000

               Accounts Payable

1,000,000

B)

Accounts Payable

1,000,000

               Merchandise Inventory

1,000,000

C)

Accounts Payable

1,000,000

               Cash

1,000,000

D)

Accounts Payable

1,000,000

               Merchandise Inventory

100,000

               Cash

900,000

24) A company that uses a perpetual inventory system purchased inventory on account and later returned goods worth $200 to the vendor. The journal entry to record these returns would be:

A)

Purchase Returns

200

               Accounts payable

200

B)

Accounts Payable

200

               Purchase Returns

200

C)

Merchandise Inventory

200

               Accounts Payable

200

D)

Accounts Payable

200

               Merchandise Inventory

200

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