Question Details

Walsh should record the cost of this merchandise as 



1.	How should the following costs affect a retailer's inventory valuation?
		Freight-in	Interest on Inventory Loan
	a.	Increase	No effect
	b.	Increase	Increase
	c.	No effect	Increase
	d.	No effect	No effect

	2.	The following information applied to Howe, Inc. for 2010:
Merchandise purchased for resale	$300,000
Freight-in	8,000
Freight-out	5,000
Purchase returns	2,000
		Howe's 2010 inventoriable cost was
a.	$300,000.
b.	$303,000.
c.	$306,000.
d.	$311,000.

	3.	The following information was derived from the 2010 accounting records of Perez Co.:
			Perez 's Goods
			Perez 's Central Warehouse	Held by Consignees
Beginning inventory	$130,000	$  14,000
Purchases	575,000	70,000
Freight-in	10,000
Transportation to consignees		5,000
Freight-out	30,000	8,000
Ending inventory	145,000	20,000
		Perez's 2010 cost of sales was
a.	$570,000.
b.	$600,000.
c.	$634,000.
d.	$639,000.
	4.	Dole Corp.'s accounts payable at December 31, 2010, totaled $800,000 before any necessary year-end adjustments relating to the following transactions:
•	On December 27, 2010, Dole wrote and recorded checks to creditors totaling $350,000 causing an overdraft of $100,000 in Dole's bank account at December 31, 2010. The checks were mailed out on January 10, 2011.
•	On December 28, 2010, Dole purchased and received goods for $150,000, terms 2/10, n/30. Dole records purchases and accounts payable at net amounts. The invoice was recorded and paid January 3, 2011.
•	Goods shipped f.o.b. destination on December 20, 2010 from a vendor to Dole were received January 2, 2011. The invoice cost was $65,000.
		At December 31, 2010, what amount should Dole report as total accounts payable?
a.	$1,362,000.
b.	$1,297,000.
c.	$1,050,000.
d.	$950,000.

	5.	The balance in Moon Co.'s accounts payable account at December 31, 2010 was $700,000 before any necessary year-end adjustments relating to the following:
•	Goods were in transit to Moon from a vendor on December 31, 2010. The invoice cost was $40,000. The goods were shipped f.o.b. shipping point on December 29, 2010 and were received on January 4, 2011.
•	Goods shipped f.o.b. destination on December 21, 2010 from a vendor to Moon were received on January 6, 2011. The invoice cost was $25,000.
•	On December 27, 2010, Moon wrote and recorded checks to creditors totaling $30,000 that were mailed on January 10, 2011.
		In Moon's December 31, 2010 statement of financial position, the accounts payable should be
a.	$730,000.
b.	$740,000.
c.	$765,000.
d.	$770,000.

6.	Kerr Co.'s accounts payable balance at December 31, 2010 was $1,500,000 before considering the following transactions:
•	Goods were in transit from a vendor to Kerr on December 31, 2010. The invoice price was $70,000, and the goods were shipped f.o.b. shipping point on December 29, 2010. The goods were received on January 4, 2011.
•	Goods shipped to Kerr, f.o.b. shipping point on December 20, 2010, from a vendor were lost in transit. The invoice price was $50,000. On January 5, 2011, Kerr filed a $50,000 claim against the common carrier.
In its December 31, 2010 statement of financial position, Kerr should report accounts payable of
a.	$1,620,000.
b.	$1,570,000.
c.	$1,550,000.
d.	$1,500,000.

	7.	Walsh Retailers purchased merchandise with a list price of $50,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. Walsh should record the cost of this merchandise as 
a.	$35,000.
b.	$36,000.
c.	$39,000.
d.	$50,000.



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