Question

1. In its first month of operation, Invento, Inc., purchased $30,000 of inventory, paid $1,500 for...

1. In its first month of operation, Invento, Inc., purchased $30,000 of inventory, paid $1,500 for shipping costs, returned $4,500 of the shipment to the supplier, and received a $600 discount for early payments to its supplier. $6,000 0f the inventory (after all adjustment) was sold during the month for $10,500. The balance at the end of the month in inventory should be:

A. $19,500

B. $18,900

C. 26,400

D.20,400

E. 24,000

2.  What is the benefit and cost of extending credit to customers:

  1. Benefit: Increased Sales; Cost: Uncollectible Account
  2. Benefit: More Customers; Cost: Increased Liabilities
  3. Benefit:More Customers; Cost: Lower Gross Profit
  4. Benefit: Increased Sales; Cost: Lower Gross Profit
  5. Benefit: Increased Sales; Cost: Increased Liabilities
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Homework Answers

Answer #1

Correct answer-----------------(D) $20,400

Working

Inventory purchased $    30,000.00
Add: Shipping cost $      1,500.00
Less: Purchase Returns $    (4,500.00)
Less: Discount $        (600.00)
Less: Cost of goods sold $    (6,000.00)
Ending inventory $    20,400.00

Question 2

Correct answer--------------(A) Benefit: Increased Sales; Cost: Uncollectible Account

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