Question

17. On October 1, Robertson Company sold inventory in the amount of $5,800 to Alberta, Inc. with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses a periodic inventory system. Alberta pays the invoice on October 8 and takes the appropriate discount. What journal entry will be recorded by Robertson on October 8 if they use the gross method?

A) Debit Cash and credit Accounts Receivable for $5,800.

B) Debit Cash and credit Accounts Receivable for $4,000.

C) Debit Cash for $3,920, debit Sales Revenue for $80, and credit Accounts Receivable for $4,000.

D) Debit Cash for $5,684, debit Sales Revenue for $116, and credit Accounts Receivable for $5,800.

19. Maxell Company uses the FIFO method to assign costs to inventory and cost of goods sold. The company uses a periodic inventory system. Consider the following information:

Date                      Description                         # of units             Cost per unit

January 1             Beginning inventory       100                         $5

June 2                   Purchase                             75                           $4

November 5       Sales                                      125        

What amounts would be reported as the cost of goods sold and ending inventory balances for the year?

Cost of goods sold $625; Ending inventory $175

Cost of goods sold $755; Ending inventory $225

Cost of goods sold $550; Ending inventory $250

Cost of goods sold $600; Ending inventory $200

24. Beyer Company bought inventory from Sellar Company, FOB destination. On December 31, the last day of the accounting year, the goods were on a truck owned by Common Carrier, Inc., and not expected to arrive until January 2. Which company should include these goods in its December 31 inventory?

Sellar

Beyer

Common Carrier

None of them should include these goods in inventory.

Answer 1

Solution 17:

Sales = $5800

Sale discount = $5800* 2% = $116

Cash Received = $5800-$116 = $5,684

Journal entry to be recorded:

Debit Cash for $5,684

Debit Sales Revenue for $116

Credit Accounts Receivable for $5,800

Hence option "D" is correct.

Solution 19:

Cost of goods sold (FIFO) = 100 units from beginning Inventory + 25 units from June 2 Purchases

= 100*$5 + 25*$4 = 500 + 100 = $600

Ending Inventory units = 100+75 -125 = 50 Units

Ending Inventory cost = 50 units *$4 = $200

Hence last option is correct.

Solution 24:

Seller Company should include these goods in its December 31 inventory.

Hence first option is correct.