Question

38. Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

Select one:

a. Inventory account

b. Purchases account

c. Accounts Receivable account

d. Cost of Goods Sold account

39. Floor Covering Inc. maintains inventory records using a perpetual costing system and a FIFO cost flow assumption. Data for June 2018, is as follows:

June 1           Balance               90 units at $10
June 10         Purchase            110 units at $12
June 15         Sale                    120 units at $20
June 17         Purchase            130 units at $13
June 27         Sale                    100 units at $20

The journal entry for the sale on June 27 will include a:

Select one:

a. debit to Cost of Goods Sold for $1,220

b. debit to Cost of Goods Sold for $1,300

c. debit to Inventory for $1,400

d. Credit to Cost of Goods Sold for $1,300

Answer 1

38. Under a perpetual inventory system, acquisition of merchandise for resale is debited to the Inventory account.

Correct option is (a)

Under a periodic inventory system, acquisition of merchandise for resale is debited to the Purchases account.

39.

As per FIFO method, 100 units sold on June 27 will consist of 80 units purchased on June 10 and 20 units purchased on June 17.

Cost of goods sold on June 27 = 80 x 12 + 20 x 13

= 960 + 260

= $1,220

The journal entry for the sale on June 27 will include a: debit to Cost of Goods Sold for $1,220 and a credit to inventory for $1,220.

Correct option is (a)