3. A companys normal selling price for its product is $24 per unit. However, due to market competition, the selling price has fallen to $19 per unit. This company's current FIFO inventory consists of 240 units purchased at $20 per unit. Net realizable value has fallen to $17 per unit. Calculate the value of this company's inventory at the lower of cost or market.

Multiple Choice

• $4,080.

• $4,030.

• $4,800.

• $4,180.

4. A company purchased $2,600 of merchandise on July 5 with terms 3/10, n/30. On July 7, it returned $600 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is:

Multiple Choice

• Debit Merchandise Inventory $2,000; credit Cash $2,000.

• Debit Cash $2,000; credit Accounts Payable $2,000.

• Debit Accounts Payable $2,000; credit Merchandise Inventory $60; credit Cash $1,940.

• Debit Accounts Payable $2,600; credit Cash $2,600.

• Debit Accounts Payable $2,000; credit Cash $2,000.

6. In its first year of business, Borden Corporation had sales of $2,080,000 and cost of goods sold of $1,240,000. Borden expects returns in the following year to equal 6% of sales. The adjusting entry or entries to record the expected sales returns is (are):

Multiple Choice

• Accounts Receivable	2,080,000
  Sales		2,080,000

• Sales Returns and Allowances	124,800
  Sales		124,800
  Cost of Goods Sold	74,400
  Inventory Returns Estimated		74,400

• Sales	2,080,000
  Sales Refund Payable		124,800
  Accounts Receivable		1,955,200

• Sales Refund Payable	124,800
  Accounts Receivable		124,800

• Sales Returns and Allowances	124,800
  Sales Refund Payable		124,800
  Inventory Returns Estimated	74,400
  Cost of Goods Sold		74,400