Question :
91. The amount recorded for merchandise inventory includes all of the : 1225806
91. The amount recorded for merchandise inventory includes all of the following except:
A. Purchase discounts.
B. Returns and allowances.
C. Freight costs paid by the buyer.
D. Freight costs paid by the seller.
E. Trade discounts.
92. A company uses the perpetual inventory system and recorded the following entry
This entry reflects a:
A. Purchase of merchandise on credit.
B. Return of merchandise.
C. Sale of merchandise on credit.
D. Payment of the account payable and recognition of a 2% cash discount taken.
E. Payment of the account payable and recognition of a 1% cash discount taken.
93. A debit memorandum is:
A. Required whenever a journal entry is recorded.
B. The source document for the purchase of merchandise inventory.
C. Required when a purchase discount is granted.
D. The document a buyer issues to inform the seller of a debit made to the seller’s account in the buyer’s records.
E. Not necessary in a perpetual inventory system.
94. A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals:
A. $200.
B. $1,564.
C. $1,568.
D. $1,600.
E. $1,800.
95. A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is:
A. $3,725.00.
B. $3,925.00.
C. $3,995.00.
D. $4,000.50.
E. $4,075.00.
96. A buyer failed to take advantage of the vendor’s credit terms of 2/15, n/45, but instead paid the invoice in full at the end of 60 days. By not taking advantage of the cash discount, the buyer lost the equivalent of ____________ annual interest on the amount of the purchase.
A. 12.2%
B. 16.2%
C. 18.9%
D. 24.3%
E. 24.5%
97. Sales returns:
A. Refer to merchandise that customers return to the seller after the sale.
B. Refer to reductions in the selling price of merchandise sold to customers.
C. Represent cash discounts.
D. Represent trade discounts.
E. Are not recorded under the perpetual inventory system until the end of each accounting period.
98. All of the following statements regarding sales returns and allowances are true except:
A. Sales returns and allowances can include a reduction is the selling price because of damaged merchandise.
B. Sales returns and allowances do not reflect the possibility of lost future sales.
C. Sales returns and allowances are recorded in a separate contra-revenue account.
D. Sales returns and allowances are rarely disclosed in published financial statements.
E. Sales returns and allowances are closed to the Income Summary account.
99. A debit to Sales Returns and Allowances and a credit to Accounts Receivable:
A. Reflects an increase in amount due from a customer.
B. Recognizes that a customer returned merchandise and/or received an allowance.
C. Requires a debit memorandum to recognize the customer’s return.
D. Is recorded when a customer takes a discount.
E. Reflects a decrease in amount due a supplier.
100. Sales less sales discounts less sales returns and allowances equals:
A. Net purchases.
B. Cost of goods sold.
C. Net sales.
D. Gross profit.
E. Net income.