Question Details

Cartier Company purchased inventory 



1. The Merchandise Inventory account balance appearing in a worksheet represents the
a. ending inventory.
b. beginning inventory.
c. cost of merchandise purchased.
d. cost of merchandise sold.
Additional Multiple Choice Questions
2. Cole Company has sales revenue of $39,000, cost of goods sold of $24,000 and
operating expenses of $9,000 for the year ended December 31. Cole's gross profit is
a. $30,000.
b. $15,000.
c. $6,000.
d. $0.
3. Logan Company made a purchase of merchandise on credit from Claude Corporation on
August 3, for $6,000, terms 2/10, n/45. On August 10, Logan makes the appropriate
payment to Claude. The entry on August 10 for Logan Company is
a. Accounts Payable................................................................. 6,000
Cash.............................................................................. 6,000
b. Accounts Payable................................................................. 5,880
Cash.............................................................................. 5,880
c. Accounts Payable................................................................. 6,000
Purchase Returns and Allowances ............................... 120
Cash.............................................................................. 5,880
d. Accounts Payable................................................................. 6,000
Merchandise Inventory.................................................. 120
Cash.............................................................................. 5,880
4. Cartier Company purchased inventory from Pissaro Company. The shipping costs were
$400 and the terms of the shipment were FOB shipping point. Cartier would have the
following entry regarding the shipping charges:
a. There is no entry on Cartier's books for this transaction.
b. Freight Expense................................................................... 400
Cash ........................................................................... 400
c. Freight-out ........................................................................... 400
Cash ........................................................................... 400
d. Merchandise Inventory ........................................................ 400
Cash ........................................................................... 400
5. In a perpetual inventory system, a return of defective merchandise by a purchaser is
recorded by crediting
a. Purchases.
b. Purchase Returns.
c. Purchase Allowance.
d. Merchandise Inventory




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