learning objective 5 7 1 under the periodic inventory system purchases purchase disc 4306734

learning objective 5 7 1 under the periodic inventory system purchases purchase disc 4306734

Learning Objective 5-7

1) Under the periodic inventory system, purchases, purchase discounts, and purchase returns and allowances are recorded in the Merchandise Inventory account as and when they occur.

2) If a merchandiser uses the periodic inventory system, it is necessary to conduct a physical count of inventory to determine the quantity of inventory on hand.

3) Which of the following line items would appear on the income statement of a company that uses the periodic inventory system, but not on that of a company that uses the perpetual inventory system?

A) Net Sales Revenue

B) Cost of Goods Sold

C) Cost of Goods Available for Sale

D) Operating expenses

4) A merchandiser purchased inventory on account for $10,000. Under the periodic inventory system, the journal entry to record purchases would include ________.

A) a debit to Purchases for $10,000 and a credit to Accounts Payable for $10,000

B) a debit to Accounts Payable for $10,000 and a credit to Purchases for $10,000

C) a debit to Merchandise Inventory for $10,000 and a credit to Accounts Payable for $10,000

D) a debit to Accounts Payable for $10,000 and a credit to Merchandise Inventory for $10,000

5) A merchandiser returned inventory worth $2,000 that was purchased on account. Under the periodic inventory system, the journal entry to record such returns would include ________.

A) a debit to Purchase Returns and Allowances for $2,000 and a credit to Accounts Payable for $2,000

B) a debit to Accounts Payable for $2,000 and a $2,000 credit to Purchase Returns and Allowances

C) a debit to Purchases for $2,000 and a credit to Accounts Payable for $2,000

D) a debit to Accounts Payable for $2,000 and a credit to Purchases for $2,000

6) Which of the following is the correct journal entry for freight paid on goods purchased by a merchandiser using the periodic inventory system?

A)

Purchases

        Accounts Payable

B)

Merchandise Inventory

        Accounts Payable

C)

Freight In

        Cash

D)

Accounts Payable

        Cash

7) Which of the following is the correct journal entry for purchase returns of goods purchased on account under the periodic inventory system?

A)

Purchase Returns and Allowances

        Accounts Payable

B)

Accounts Payable

        Merchandise Inventory

C)

Accounts Payable

        Purchase Returns and Allowances

D)

Merchandise Inventory

        Accounts Payable     

8) Calculate the cost of goods sold for a merchandiser using the periodic inventory system from the following details.

Purchases

$500,000

Beginning Merchandise Inventory

175,000

Purchase Returns and Allowances

50,000

Purchase Discounts

12,000

Freight In:

15,000

Ending Merchandise Inventory

150,000

A) $500,000

B) $478,000

C) $490,000

D) $625,000

9) The following details are provided by Blue Bell Merchandisers. The company uses the periodic inventory system.

Net Sales

$198,000

Purchases

92,000

Purchases Returns and Allowances

1,800

Purchases Discounts

1,250

Freight In

1,590

Beginning Merchandise Inventory

63,000

Ending Merchandise Inventory

37,000

Calculate the amount of net purchases.

A) $151,950

B) $87,360

C) $88,950

D) $106,000

10) From the following details of a merchandiser, calculate the Cost of Goods Sold. (Assume the merchandiser uses the periodic inventory system.)

Net Sales

$198,000

Purchases

92,000

Purchases Returns and Allowances

1,800

Purchases Discounts

1,250

Freight In

1,590

Beginning Merchandise Inventory

63,000

Ending Merchandise Inventory

37,000

A) $116,540

B) $81,460

C) $114,950

D) $53,540

11) Avery Inc. uses the periodic inventory system. On February 1, the corporation purchased inventory on account for $10,000. The terms of invoice were 3/10, n/30. The amount due was paid on February 9. Which of the following journal entries correctly records the payment in the books of Avery Inc.?

A)

Accounts Payable

10,000

       Purchase Discounts

300

       Cash

9,700

B)

Accounts Payable

10,000

       Cash

10,000

C)

Accounts Payable

10,000

       Purchases

10,000

D)

Accounts Payable

10,000

       Merchandise Inventory

300

       Cash

9,700

12) Avery Inc. uses the periodic inventory system. On February 1, the corporation purchased inventory on account for $10,000. The terms were 3/10, n/30. On February 2, it returned damaged goods worth $400 to the supplier and was granted an allowance. Give the journal entry for the payment if the invoice is paid after the discount period.

A)

Accounts Payable

9,600

       Cash

9,312

       Purchase Discounts

88

B)

Cash

10,000

       Accounts Payable

10,000

C)

Accounts Payable

9,600

       Cash

9,600

D)

Cash

9,312

Purchase Discounts

288

       Accounts Payable

9,600

13) Avery Inc. uses a periodic inventory system. From the following details, calculate net purchases.

Beginning merchandise inventory

$3,000

Ending inventory

2,100

Purchases

24,000

Purchase Discounts

800

Purchase Returns & Allowances

1,200

Freight In

4,200

A) $26,000

B) $22,000

C) $25,000

D) $23,200

14) Avery Inc. uses a periodic inventory system. From the following details, calculate the cost of goods sold.

Beginning merchandise inventory

$3,000

Ending inventory

2,100

Purchases

24,000

Purchase Discounts

800

Purchase Returns & Allowances

1,200

Freight In

4,200

A) $26,000

B) $22,000

C) $27,100

"Get 15% discount on your first 3 orders with us"
Use the following coupon
"FIRST15"

Order Now

Related Posts