Question

14. Walmart operates using a perpetual inventory system. They purchase $15,000 worth of inventory. Which of the following is the correct way to account for this purchase?

1. $ Purchases: +15,000

2. $ No Entry

3. $ Inventory: +15,000 and Cash: -15,000

4. $ COGS: +15,000 and Inventory: +15,000

Question 2

15. Apple has gross sales of $130,000, gives sales discounts of $15,000, and has net sales of $95,000. What were Apple's sales returns and allowances?

1. $ 50,000

2. $ 20,000

3. $ 35,000

4. $ 210,000

Question 3

16. Aldi Currently has $15,000 worth of inventory. On October 28th, they order 13,000 worth of inventory. The contract specifies FOB destination. The inventory will not be delivered until November 5th. How much inventory should they record at the end of October?

1. $ 13,000

2. $ 2,000

3. $ 18,000

4. $ 15,000

Question 4

17. Tom’s Clothing Store sends $12,000 worth of its $90,000 inventory to Bob’s Consignment Store, who has $13,000 of its own inventor. At the point in time when the inventory leaves the shipping point, what are the inventories of each store?

1. Tom’s: $90,000 and Bob’s: $25,000

2. Tom’s: $90,000 and Bob’s: $13,000  

3. Tom’s: $78,000 and Bob’s: $25,000

4. Tom’s: $78,000 and Bob’s: $13,000

Answer 1

Solution 1:

The correct way to account for this purchase is "Inventory: +15,000 and Cash: -15,000"

Hence 3rd option is correct.

Solution 2:

Sales returns and allowances = Gross sales - Net sales - Sales discounts = $130,000 - $95,000 - $15,000 = $20,000

Hence 2nd option is correct.

Solution 3:

Inventory to be recorded at the end of October = $15,000

$13,000 inventory will not be recorded as its term is FOB destination.

Hence last option is correct.

Solution 4:

At the point in time when the inventory leaves the shipping point, what are the inventories of each store is "Tom’s: $90,000 and Bob’s: $13,000 "

Hence 2nd option is correct.