Question : 61.Jayson Products uses a perpetual inventory system. At year-end, the : 1237635

 

 

61.Jayson Products uses a perpetual inventory system. At year-end, the Inventory account had a balance of $280,000, but a complete year-end physical inventory indicated goods on hand costing only $273,000. Jayson should:   

A.Reduce its cost of goods sold by $7,000.

 

B.Record a $7,000 current liability.

 

C.Reduce the balance in its Inventory control account and inventory subsidiary ledger by $7,000.

 

D.Reduce the balance in the Inventory control account and record a current liability, both in the amount of $7,000.

 

 

 

 

Washington Warehouse is a small retail business that specializes in the sale of top-of-the-line televisions. This year, the store has begun to carry the Flat TV manufactured by Bass Co. Thus far, Washington has recorded the following transactions involving the Flat TV:Jan. 5 Purchased 8 Flat TVs at a unit cost of $1,400Jan. 18 Purchased 5 additional Flat TVs at $1,400 eachFeb. 12 Sold 9 Flat TVs to the Duke Hotel for $15,300

 

62.Refer to the information above. If Washington uses a perpetual inventory system, the journal entry to record the purchase on January 18th would include which of the following?   

A.A debit to the Purchases account for $7,000.

 

B.A debit to the Cost of Goods Sold for $7,000.

 

C.A credit to Inventory for $7,000.

 

D.A debit to Inventory for $7,000.

5 × $1,400 = $7,000

 

 

 

63.Refer to the information above. The gross profit on the Flat TVs as of February 12th is:   

A.$11,200.

 

B.$2,700.

 

C.$4,100.

 

D.$15,300.

$15,300 – (9 × $1,400) = $2,700

 

 

 

64.Refer to the information above. If Washington uses a perpetual inventory system, the journal entry to record the sale on February 12th would include all of the following except:   

A.A debit to the Cost of Goods Sold for $12,600.

 

B.A credit to Sales Revenue for $15,300.

 

C.A credit to Purchases for $15,300.

 

D.A credit to Inventory for $15,300.

 

 

 

 

65.Refer to the information above. Washington maintains a subsidiary ledger account for each type of TV carried in the store. An examination of the account for the Flat TV model at the end of February would show:   

A.4 units on hand with a total value of $1,400.

 

B.4 units on hand with a total value of $5,600.

 

C.13 units on hand with a total value of $18,200.

 

D.The amount that Washington owes to Bass.

 

 

 

 

World of Sound is a small retail business that specializes in the sale of top-of-the-line sound systems. This year, the store has begun to carry the Surround Sound manufactured by Carp Co. Thus far, World of Sound has recorded the following transactions involving the Surround SoundMay 5 Purchased 18 units at a unit cost of $2,400May 18 Purchased 15 additional units at $2,550 eachJune 12 Sold 19 units to the Davies Theater

 

66.Refer to the information above. If World of Sound uses a perpetual inventory system, the journal entry to record the purchase on May 18th would include which of the following?   

A.A debit to the Purchases account for $38,250.

 

B.A debit to the Cost of Goods Sold for $38,250.

 

C.A credit to Inventory for $38,250.

 

D.A debit to Inventory for $38,250.

15 × $2,550 = $38,250

 

 

 

67.Refer to the information above. If World of Sound uses a perpetual inventory system, the journal entry to record the sale on February 12th would include which of the following (World of Sound uses FIFO meaning that the first goods purchased are the first to be sold)?   

A.A debit to the Cost of Goods Sold for $45,750.

 

B.A credit to the Cost of Goods Sold for $45,750.

 

C.A credit to Purchases for $45,750.

 

D.A debit to Inventory for $45,750.

(18 × $2,400) + (1 × $2,550) = $45,750

 

 

 

68.Inventory shrinkage is not caused by:   

A.Shoplifting.

 

B.Breakage.

 

C.Price reductions by competitors.

 

D.Spoilage.

 

 

 

 

69.In a periodic inventory system, the formula used in computing the cost of goods sold may be summarized as follows:   

A.Beginning inventory + purchases – ending inventory.

 

B.Beginning inventory + purchases – net sales.

 

C.Ending inventory + purchases – net sales.

 

D.Balance in the Cost of Goods Sold account, less the balance in the Inventory Shrinkage account.

 

 

 

 

70.In a periodic inventory system, which of the following accounts may be closed by debiting Cost of Goods Sold?   

A.Sales, Inventory (beginning), and Gross Profit.

 

B.Inventory (beginning) and Purchases.

 

C.Purchases and Inventory (ending).

 

D.Sales, Inventory (beginning), and Cost of Goods Available for Sale.