6. Goods available for sale can: A) be sold and then become cost of goods sold o

Question

6. Goods available for sale can:

A) be sold and then become cost of goods sold on the income statement

B) not be sold and thus are not reported as Cost of Goods Sold on the balance sheet

C) not be sold and thus are reported as Inventory on the income statement

D) be sold and thus reported as Cost of Goods Sold on the balance sheet

7. On July 1, Darin Company sold inventory costing $4,500 to Dee Company for $6,000, terms 2/10, n/30. Both companies use a perpetual inventory system. What journal entry will be recorded by Dee Company on July 1?

A) Debit Purchases and credit Accounts Payable for $6,000

B) Debit Inventory and credit Accounts Receivable for $6,000

C) Debit Inventory and credit Accounts Payable for $6,000

D) Debit Cost of Goods Sold and credit Inventory for $4,500

8.

If merchandise costing $500 is sold on account for $620, how is this transaction recorded when using a perpetual inventory system?

A) Debit Accounts Receivable, credit Sales Revenue for $620; debit Cost of Goods Sold, and credit Inventory for $500

B) Debit Accounts Receivable and credit Sales Revenue for $620

C) Debit Cash and credit Sales Revenue for $620; debit Cost of Goods Sold and credit Inventory for $500

D) Debit Accounts Receivable and credit Sales Revenue for $620; debit Inventory and credit Cost of Goods Sold for $500

9.

When goods are sold to a customer with credit terms of 2/15, n/30, the customer will receive a:

A) 15% discount if they pay within 2 days.

B) 2% discount if they pay 15% of the amount due within 30 days.

C) 15% discount if they pay within 30 days.

D) 2% discount if they pay within 15 days.

10. A company has net sales of $612,850 and cost of goods sold of $441,252. The company's gross profit percentage is:

A) 72%.

B) 0.28%.

C) 38.9%.

D) 28%.

Explanation / Answer

6) Goods available for sale can be sold and become cost of goods sold under income statement

So answer is a) be sold and then become cost of goods sold on the income statement

7) Journal entry Dee company :

So answer is c) Debit Inventory and credit Accounts Payable for $6,000

8) Journal entry :

So answer is a) Debit Accounts Receivable, credit Sales Revenue for $620; debit Cost of Goods Sold, and credit Inventory for $500

9) When goods are sold to a customer with credit terms of 2/15 it means 2% discount is the pay within 15 days

so answer is d) 2% discount if they pay within 15 days.

10) Gross profit percentage = (612850-441252)*100/612850 = 28%

So answer is d) 28%

Date account and explanation debit credit Inventory 6000 Account payable 6000 (To record purchase)

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