1.Abbey Co. sold merchandise to Gomez Co. on account, $32,300, terms 2/15, net 45. The cost of the goods sold was $13,380. Abbey Co. issued a credit memo for $3,900 for merchandise returned that originally cost $1,235. Gomez Co. paid the invoice within the discount period. What is the amount of gross profit earned by Abbey Co. on the above transactions?

a.$15,687

b.$3,900

c.$12,145

d.$19,509

2. Madison Company's perpetual inventory records indicate that $535,330 of merchandise should be on hand on October 31. The physical inventory indicates that $503,740 is actually on hand.

Journalize the adjusting entry for the inventory shrinkage for Madison Company for the year ended October 31. If an amount box does not require an entry, leave it blank.

Oct. 31 ____________ _____ _____

____________ ______ ______

3.Determine the amount to be paid in full settlement of each invoice, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

	Merchandise		Freight Paid by Seller	Freight Terms	Returns and Allowances
a.	$6,400		$286	FOB Shipping Point, 1/10, net 30	$600
b.	$7,200		$90	FOB Destination, 2/10, net 45	$1,600

a. $_____

b. $_____

4. A company using the periodic inventory system has the following account balances: Inventory at the beginning of the year, $3,995; Freight-In, $583; Purchases, $13,847; Purchases Returns and Allowances, $4,011; Purchases Discounts, $260. The cost of merchandise purchased is equal to

a.$10,159

b.$14,706

c.$22,696

d.$13,847

5.Abbey Co. sold merchandise to Gomez Co. on account, $17,400, terms 2/15, net 30. The cost of the goods sold is $12,180. Abbey Co. issued a credit memo for $3,000 for merchandise returned that originally cost $2,100. Gomez Co. paid the invoice within the discount period. What is the amount of gross profit earned by Abbey Co. on the above transactions?

6. A sales invoice included the following information: merchandise price, $5,600; terms 1/10, n/eom; FOB shipping point with prepaid freight of $420 added to the invoice. Assuming that a credit for merchandise returned of $1,100 is granted prior to payment and that the invoice is paid within the discount period, what is the amount of cash that should be received by the seller?

a.$5,960

b.$4,875

c.$1,100

d.$5,600

$________

7. A company using the periodic inventory system has inventory costing $182 on hand at the beginning of a period. During the period, merchandise costing $404 is purchased. At year-end, inventory costing $331 is on hand. The cost of goods sold for the year is

a.$255

b.$331

c.$182

d.$404