1. Under the perpetual inventory system, inventory becomes part of cost of goods sold when a company

a. receives payment from the customer

b. purchases the inventory

c. sells the inventory

d. pays for the inventory

2. In credit terms of 4/13, n/45, the "4" represents the

a. number of days in the discount period

b. number of days when the entire amount is due

c. full amount of the invoice

d. percent of the cash discount

3. Merchandise with a sales price of $3,500 is sold on account with terms 2/10, n/60. The journal entry to record the sale would include a

a. debit to Cash for $3,500

b. credit to Sales for $3,430

c. debit to Accounts Receivable for $3,500

d. debit to Merchandise Inventory for $70

4. Kline Goods purchases merchandise with a catalog list price of $40,000. The retailer receives a 25% trade discount and credit terms of 2/10, n/30. What amount should Kline debit to the Merchandise Inventory account?

a. $29,200

b. $29,400

c. $30,000

d. none of the above