Question

1.

Under the perpetual inventory system, which of the following accounts would not be used?

Select one:

a. Sales

b. Accounts Payable

c. Cost of Goods Sold

d. Purchases

e. Inventory

2.

Jones Merchandise uses a perpetual inventory system. It is a publicly traded company. On February 19 it sold $8,000 of motor parts to Vivak Candles on account. Jones statistics indicate 5% of its sales will result in returns. Jones's cost of inventory on motor parts is 50% of the sales price. Jones's entry to record the credit sale will be:

Select one:

a. DR Cost of Goods Sold $4,000; CR Sales $3,600 CR Inventory Liability $400

b. DR Inventory $8,000; CR Sales $7,600 CR Refund Liability $400

c. DR Cost of Goods Sold $4,000 DR Estimated Inventory Returns $4,000; CR Sales $7,600 CR Refund Liability $400

d. DR Accounts Receivable $8,000; CR Sales $7,600 CR Refund Liability $400

e. DR Accounts Receivable $8,000; CR Sales $$8,000

3.

Mandy Corp. purchased inventory as follows:

       March 3    500 units at $18

       March 4    300 units at $20

       March 7    200 units at $22

On March 5, Mandy sold 600 units for $30 each. The average unit cost to be used for the cost of goods sold on March 5, in a perpetual inventory system, is

Select one:

a.  $19.40.

b. $30.00

c. $16.67.

d.  $18.80.

e.  $25.00.

4.

If a purchaser using a perpetual inventory system pays freight costs, then the

Select one:

a.  Freight Out account is increased.

b.  Inventory account is increased.

c. Freight In account is increased.

d.  Inventory account is not affected.

e. Cost of Goods Sold is decreased

5.

On September 1, Piano Keys Corp. borrowed $30,000 from their bank, and signed a 5%, 3-month bank loan. Principal and interest are due on December 1. If Piano Keys prepares monthly financial statements, the adjusting entry that it should prepare for interest on September 30 would be

Select one:

a. debit Bank Loan Payable, $375; credit Cash, $375.

b.  debit Cash, $30,000; credit Bank Loan Payable, $30,000.

c. debit Interest Expense, $1,500; credit Interest Payable, $1,500.

d.  debit Interest Expense, $125; credit Interest Payable, $125.

e.  debit Interest Expense, $125; credit Cash, $125.

Answer 1

Answer-

1) Option D),Purchases is correct.

Under perpetual inventory system "Purchases" is not used.

2) Option E ) is correct,

Following journal entry shall be passed-

Accounts Receivables Dr. $ 8,000

Sales Cr. $ 8,000

3) Option a) is correct, $ 19.40,

Average unit cost of COGS shall be -

= (500*18 + 300*20 + 200*22) / 1000

= $ 19.40

4) Option B) is correct, Inventory account is increased,

Freight cost for purchase inventory is integral part of inventory,which must be debited to inventory account.

5) Option d) is correct,

The following interest shall be paid-

= (30,000*5%*1/12)

= $125

And following journal entry shall be made-

Interest expenses Dr. $125

Interest payable Cr. $125

Please comment for any explanation,

Thanks