21) Which of the following is NOT used to determine the cost of net purchases?
A) Freight-out
B) Freight-in
C) Purchase returns
D) Purchase discounts
22) When inventory is shipped from the seller to the buyer with shipping terms of FOB destination:
A) title passes from the seller to the buyer when the goods leave the seller's shipping dock.
B) the goods will be included in the inventory of the buyer while in transit.
C) the seller has title to the goods while they are in transit.
D) the buyer will pay the transportation costs associated with the purchase.
23) Company A has inventory out on consignment and held for sale by Company B. Which Company will include the goods in their inventory?
A) Company A
B) Company B
C) Either Company A or Company B
D) Cannot be determined from the facts
24) Using a perpetual inventory system, what journal entry(ies) is(are) prepared when two units of merchandise are sold on account?
A) debit Accounts Receivable and credit Sales Revenue only
B) debit Cash and credit Sales Revenue only
C) debit Accounts Receivable and credit Sales Revenue; debit Cost of Goods Sold and credit Inventory
D) debit Accounts Receivable and credit Sales Revenue; debit Inventory and credit Cost of Goods Sold
25) A company purchased inventory for $800 per unit. The company later sold one unit of the inventory for cash of $1,500. Under the perpetual inventory system, which accounts will be debited to record the sale?
A) Cash, $1,500; Inventory, $800
B) Cash, $1,500; Cost of Goods Sold, $800
C) Cash, $1,500; Cost of Goods Sold, $700
D) Cash, $1,500; Inventory, $700
26) Under a perpetual inventory system, the journal entry to record the purchase of inventory on account will include a:
A) debit to Inventory and a credit to Cash.
B) debit to Inventory and a credit to Accounts Payable.
C) debit to Accounts Payable and a credit to Inventory.
D) debit to Purchases and a credit to Accounts Payable.
27) The selling price of a television is $1,000 and the cost to the retailer is $725. What is the retailer's gross profit from the sale of the television?
A) $0
B) $275
C) $725
D) $1,000
28) Boston Company sells twenty items for $1,000 per unit, and has a cost of goods sold percentage of 70%. The gross profit to be reported for selling 20 items is:
A) $300.
B) $6,000.
C) $14,000.
D) $20,000.
29) Sanfran Company purchased inventory for $100,000. In addition they had purchase returns of $7,000 and paid freight-in of $8,000. Sanfran Company's net cost of purchases would be:
A) $ 85,000.
B) $ 99,000.
C) $101,000.
D) $115,000.
30) Grogan Company purchases inventory on account with a cost of $1,000 and a retail price of $2,000. Grogan Company uses the perpetual inventory method. What journal entry is required on the date of purchase?
A) debit Purchases for $1,000 and credit Accounts Payable for $1,000
B) debit Purchases for $2,000 and credit Cash for $2,000
C) debit Inventory for $1,000 and credit Accounts Payable for $1,000
D) debit Accounts Receivable for $2,000 and credit Purchases for $2,000