Practice Mid-Term Exam 2 Attempt all questions. All questions carry equal marks. Duration: One Hour 1 Sales revenue less cost of goods sold is called a gross profit b. net profit c. net income. d. marginal income. 2. The Journal entry to record a return of merchandise purchased on account under a perpetual a Inventory system would credit a Accounts Payable. b. Purchase Returns and Allowances. c. Sales Revenue. dInventory 3.Jake's Market recorded the following events involvin a recent purchase of merchandise Received goods for $60,000, terms 2/10,n/30 Returned $1.200 of the shipment for credit Paid $300 freight on the shipment. Paid the invoice within the discount period As a result of these events, the company's inventory increased by a $57 624 b. $57,918 C. $57,924 di $59 100 4. Company X sells $900 of merchandise on account to Company with credit terms of 2/10./30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check? a $630 b. $720 $810 d. $882 5. The Sales Returns and Allowances account is classified as an a, asset account b. contra asset account G expense account. d. contra revenue account. 6.In preparing closing entries for a merchandising company, the income Summary account will be credited for the balance of a. sales revenue. b. inventory c. sales discounts d. freight-out 7.Gross profit for a merchandiser is net sales minus a. operating expenses. b. cost of goods sold c. sales discounts d. cost of goods available for sale 8. It goods in transit are shipped FOB destination the seller hos legal title to the goods until they are delivered. D. the buyer has legit title to the goods until they are delivered the transportation company has legal title to the goods while the goods are in transit d no one has legal title to the goods until they are delivered 9. Partridge Bookstore had 500 unts on hand at January 1, costing $9 each. Purchases and sales during the month of January were as follows: Date Purchases Sales Jan 14 375 $14 17 250 @ $10 25 250 @ $11 29 260 @ 516 Partridge does not maintain perpetual inventory records. According to a physical count 365 units were on hand at January 31 The cost of the inventory at January 31, under the FIFO method is a $3 285, b. $3,650 C. $3,900. d. $4,015 10 A company lust starting business made the following four inventory purchases in June: June 1 150 units $ 390 June 10 200 units 585 June 15 200 units 630 June 28 150 units 510 $2.115 A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the average-cost method, the amount allocated to the ending inventory (rounded to the nearest dollar) on June 30 is a $683 b. $755 C$825 d. 51,360 11. Which one of the following inventory methods is often impractical to use? a. Specific identification 6. LIFO C. FIFO d. Average cost 12.Priscilla has the following inventory Information July 1 Beginning Inventory 20 units at $19 $ 380 7 Purchases 70 units at $20 1,400 22 Purchases 10 units at $23 230 $2.010 A physical count of merchandise inventory on July 31 reveals that there are 35 units on hand Using the LIFO inventory method, the amount allocated to cost of goods sold for July is a. $1280 b. $1,287 CS1,306 d. $1,330
