Question Details

Cost of goods available for sale is computed 



1. At the beginning of September, 2008, RFI Company reported Merchandise Inventory of
$4,000. During the month, the company made purchases of $7,800. At September 31,
2008, a physical count of inventory reported $3,200 on hand. Cost of goods sold for the
month is
a. $600.
b. $7,800.
c. $8,600.
d. $11,800.
2. At the beginning of the year, Midtown Athletic had an inventory of $400,000. During the
year, the company purchased goods costing $1,600,000. If Midtown Athletic reported
ending inventory of $600,000 and sales of $2,000,000, the company- cost of goods sold
and gross profit rate must be
a. $1,000,000 and 50%.
b. $1,400,000 and 30%.
c. $1,000,000 and 30%.
d. $1,400,000 and 70%.
3. During the year, Darla- Pet Shop- merchandise inventory decreased by $20,000. If the
company- cost of goods sold for the year was $300,000, purchases must have been
a. $320,000.
b. $280,000.
c. $260,000.
d. Unable to determine.
4. Cost of goods available for sale is computed by adding 
a. beginning inventory to net purchases.
b. beginning inventory to the cost of goods purchased.
c. net purchases and freight-in.
d. purchases to beginning inventory.
5. The Freight-in account
a. increases the cost of merchandise purchased.
b. is contra to the Purchases account.
c. is a permanent account.
d. has a normal credit balance.




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