1. ABC Co. sold merchandise inventory on account for $10,000 that cost $7,000.

   Under the periodic approach, the entry (entries) at the time of the sale of the inventory on account is (are) as follows:

   	a.	Cost of goods sold.7,000 Inventory7,000
   	b.	Accounts receivable10,000 Sales.10,000 and Cost of goods sold.7,000 Inventory...7,000
   	c.	Accounts receivable.10,000 Sales.10,000
   	d.	Cash.10,000 Accounts receivable.10,000 and Cost of goods sold.7,000 Inventory7,000

ABC Co. sold merchandise inventory on account for $10,000 that cost $7,000.

Under the perpetual approach, the entry (entries) at the time of the sale of the inventory on account is (are) as follows:

	a.	Cost of goods sold.7,000 Inventory7,000
	b.	Accounts receivable10,000 Sales.10,000 and Cost of goods sold.7,000 Inventory...7,000
	c.	Accounts receivable.....10,000 Sales.10,000
	d.	Cash.10,000 Accounts receivable.10,000 and Cost of goods sold.7,000 Inventory7,000

At year-end, the inventory account contains a balance of $460,000. A physical count shows that the inventory total is actually $455,000 as a result of normal shrinkage. The entry needed to record normal inventory shrinkage is as follows:

	a.	Cost of goods sold...5,000 Inventory.5,000
	b.	Inventory.....5,000 Cost of goods sold..5,000
	c.	Inventory shrinkage loss..5,000 Inventory.5,000
	d.	Cost of goods sold5,000 Inventory shrinkage loss.5,000