13. Inventory shrinkage: A) Refers to the loss of inventory determined by comparing a physical count of inventory with recorded inventory amounts. C) Is recognized by debiting Cost of Goods Sold Account. D) Can be caused by theft or deterioration. E) All of the above. 14. The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit if goods are shipped FOB destination. A) True. 8) False. 15. A multiple-step income statement format shows detailed computations of net sales and other costs and expenses and reports subtotals for various classes of items A) True B) False 16. Which of the following entries would be made to record the purchase of inventory on account if a company uses the perpetual inventory system? A) a debit to Purchases and a credit to Accounts Payable B) a debit to Accounts Payable and a credit to Purchases C) a debit to Merchandise Inventory and a credit to Accounts Payable D) a debit to Accounts Payable and a credit to Merchandise Inventory A company purchased inventory for $75,000 from a vendor on account, FOB shipping point, with terms of 3/10, n/30. The company paid the shipper $1,500 cash for freight in. The company paid the vendor 9 days after the be: (Assume a perpetual inventory system) 17. sale. If there was no beginning inventory, the cost of inventory would A) $74,250. B) S76500. C) $71,295 D) $73,500. Under the perpetual inventory system, two journal entries are used to record the sales of merchandise. One entry records the Sales Revenue and another entry records the Cost of Goods Sold. 18. A) True. B) False. 19. The following information relates to Blake Auto Supply Net Sales Revenue Cost of Goods Sold nterest Revenue Operating Expenses $191,000 150,000 12,000 40 Calculate the net income of Blake Auto Supply. A) $1,000