1. True or false: A physical count of inventory is performed annually in both a perpetual inventory system and a periodic inventory system.

2. True or false: Sales discounts, sales returns & allowances, and cost of goods sold are all temporary accounts which are closed to retained earnings at the end of the accounting period.

3. True or false: Specific identification is the best inventory costing method because it is least open to manipulation by unscrupulous managers.

4. True or false: If inventory is sold with terms of FOB destination, the goods belong to the seller until they reach their destination.

5. True or false: the use of the Allowance method is required under the matching principle.

6. True or false: credit sales are recorded by crediting an accounts receivable for a specific customer.

7. The following merchandise transactions occurred during December for two different companies:

Rippen and Burnen. Both companies use a perpetual inventory system. On December 3, Rippen Corporation sold merchandise on account to Burnen Corp. for $489,000, terms 2/10, n/30. This merchandise originally cost Rippen $304,000. On December 8, Burnen Corp. returned merchandise to Rippen Corporation for a credit of $4,100. Rippen returned this merchandise to inventory at its original cost of $2,549. December 12, Burnen Corp. paid Rippen Corporation for the amount owed.

a. Prepare the journal entries to record these transactions on the books of Rippen Corporation. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1. Dec 3: Record the entry for sale of merchandise on account.

2. Dec 3: Record the entry for cost of merchandise sold on account from inventories.

3. Dec 8: Record the entry for return of merchandise sold on account.

4. Dec 8: Record the entry for reversal of cost of merchandise sold on account.

5. Dec 12: Record the entry for receipt of accounts receivable and related sales discount for terms 2/10, n/30.

b. what is the amount of the net sales to be reported on Rippen Corporations income statement?

c. what is the Rippen Corporations gross profit %?