1. On March 1, Troy Company purchased merchandise with an invoice price of $2,700 and 2/10, n/30 terms. On March 3, Troy pays $100 transportation cost on the purchased goods. On March 10, Troy pays for the merchandise. What is Troy’s total cost of the purchased merchandise?
2.
Newman Company started business on January 1. During the year, the company purchased merchandise with an invoice price of $500,000. Newman also paid $20,000 freight on the merchandise. During the year, Newman also returned $80,000 of the merchandise to its suppliers. All purchases were paid for in a timely manner, and a $10,000 cash discount was taken. $418,000 of the merchandise was sold for $627,000. What is the December 31 balance in the Inventory account?
3.
Saber Company uses the perpetual inventory system. Saber purchased merchandise with an invoice price of $800, terms 2/10, n/30. If Saber returns merchandise with an invoice price of $200 to the supplier, what should the journal entry to record the return include?
4.
Ira Company reports net sales of $500, cost of sales of $300, and net income of $50. What is the gross profit percentage and return on sales ratio for Ira?
5.
Smith & Sons purchased $5,000 of merchandise from the Claremont Company with terms of 3/10, n/30. How much discount is Smith & Sons entitled to take if it pays within the allowed discount period of 10 days?
6.
Moonitz Inc. purchased merchandise with a list price of $6,000 from the Sprague Company. Sprague offers its customers credit terms of 2/10, n/30. What amount should Moonitz pay if the cash discount is taken?
7.
The Arcadia Company is a merchandiser and reports the following data at year‑end:
| Net Sales | $100,000 |
| Cost of goods sold | 60,000 |
| Net income | 15,000 |
What is the company’s gross profit percentage?
8.
The Arcadia Company is a merchandiser and reports the following data at year‑end:
| Net Sales | $100,000 |
| Cost of goods sold | 60,000 |
| Net income | 15,000 |
What is The Arcadia Company’s return on sales ratio?
9.
Which of the following concepts relates to the elimination or minimization of inventories by a manufacturing firm?
10. Which inventory costing method assumes that the most recently purchased merchandise is sold first?
11.
Which inventory costing method results in the highest-valued ending inventory during a period of rising unit costs?
12.
Under which of the following freight terms does the seller retain ownership of the shipped goods?
13.
When should ending inventory be written down below its acquisition cost on the balance sheet?
14.
Which inventory costing method results in the highest net income during a period of rising unit prices?
15.
Which inventory costing method results in the lowest net income during a period of rising unit prices?
16.
Which inventory costing method does not require the use of the lower-of-cost-or-market method?
