The following are transactions of Rayan Company during August 2019. You are required to prepare journal entries (both perpetual and periodic method) and answer the multiple choice questions

Date	Transactions
August 1	Purchase merchandise from Bawshar Company for RO 7,500 under credit terms of 1/10, n/30, FOB destination.
4	At Bawshar Company’s request, RAYAN Company paid RO 200 for freight charges on august 1 purchase, reducing the amount paid to Bawshar Company.
5	Sold merchandise to Al Sabith Company for RO 5,200 under credit terms of 2/10, n/60, FOB destination. The merchandise has cost of RO 4,000.
8	Purchased merchandise from Musandam Company for RO 5,400 under credit terms 1/10, n/45, FOB shipping point. The invoice showed that RAYAN Company requested Musandam Company to pay the RO 140 freight charges and added that amount to the bill.
9	Paid RO 125 cash for shipping charges related to the August 5 sale to Al Sabith Company .
10	Al Sabith Company returned merchandise from the August 5 sale that had cost RO 400 and been sold for RO 600. The merchandise was restored to inventory.
12	After negotiation with Musandam Company concerning problems with the merchandise purchased on August 8. RAYAN Company received a credit memorandum from Musandam Company granting a price reduction of RO 700.
15	Received balance due from Al Sabith Company for the August 5 sale.
18	Paid the amount due to Musandam Company for the August 8 purchased.
19	Sold merchandise to Sadia Company for RO 4,800 under credit terms of 1/10, n/30, FOB shipping point. The merchandise had cost of RO 2,400.
22	Sadia Company requested a price reduction of August 19 sale because the merchandise did not meet specifications. Sent Sadia Company a credit memorandum for RO 500 to resolve the issue.
29	Received Sadia Company’s cash payment for the August 19 purchase.
30	Paid Bawshar Company the amount due from the August 1 purchase.

The Journal entry under the perpetual inventory method for the transaction on 1st August is

a.

Dr. Purchases RO 7,500 and Cr. Bank RO 7500

b.

Dr. Purchases RO 7,500 and Cr. Bawshar Company RO 7500

c.

Dr. Merchandise Inventory RO 7500 and Cr. cash RO 7500

d.

Dr. Merchandise Inventory RO 7500 and Cr. Bawshar Company RO 7500

Clear my choice

Question 

Amount received Sadia Company

a.

None of the options mentioned

b.

RO 4,257

c.

RO 4,300

d.

RO 4,800

Clear my choice

Question 

Total of sales discount allowed for the month of August is

a.

None of the options mentioned

b.

RO 92

c.

RO 135

d.

RO 43

Clear my choice

Question 

The account to be debited for the transaction on the 12th August under periodic inventory system is

a.

Merchandise Inventory RO 700

b.

A/P-Musandam Company RO 700

c.

Purchases Account RO 700

d.

Purchases Returns and allowances RO 700

Clear my choice

Question 

Which of the following method of inventory valuation is used for “one of the kind item” like luxury homes?

a.

Specific Identification method

b.

FIFO.

c.

Weighted Average.

d.

LIFO.

Clear my choice

Question 

Which one of the following is considered as a cash discount?

a.

A discount allowed by seller to the buyer if the buyer pays the invoice with in the specified period of time.

b.

A discount received at the time of purchase through bargaining

c.

An excess quantity received by the buyer at the time of purchase of goods.

d.

A reduction in the price of goods when a buyer buys large quantity.

Clear my choice

Question

Under which method physical inventory is determined by physical counting

a.

First in first out method

b.

Weighted average method

c.

Periodic inventory method

d.

Perpetual inventory Method

Clear my choice

Question 

In a perpetual inventory system, the Cost of Goods Sold account is used

a.

Only when a credit sale of merchandise occurs.

b.

Only when a sale of merchandise occurs.

c.

Only when a cash sale of merchandise occurs.

d.

Whenever there is a sale of merchandise or a return of merchandise sold

Clear my choice

Question

On January 10, Zahra sold 100 units on credit @$15 per unit. The cost of goods sold under perpetual system is recorded as:

a.

Dr. A/P and Cr. Sales

b.

Dr. MI and Cr. COGS

c.

Dr. A/R and Cr. Sales

d.

Dr. COGS and Cr. MI

Clear my choice

Question

Freight costs incurred by the seller are recorded in the

a.

Operating Expenses

b.

Administrative Expenses

c.

Cost of goods sold account

d.

Sales account