QUESTION 7 On March 18, James Smith purchased $5,000 of furniture from Home Furnishings on account. The cost of the goods was $3.000. On March 20. Home Furnishings granted the customer a $1,000 sales allowance for goods damaged in transit. For Home Furnishings, which of the following represents the correct way to record this transaction? Sales Returns and Allowances 1.000 Cash 1.000 Sales Revenge 1.000 1.000 Refunds Payable 1.000 Cash 1.000 800 Merchandise Inventory Estimated Returns Inventory 600 1,000 Refunds Payable Accounts Receivable 1.000 QUESTIONS Which of the following is CORRECT? Under the perpetual Inventory system, when a purchaser makes payment within the discount period, the amount of discount will be credited to the Merchandise Inventory count Purchase discounts are calculated on the amount of the merchandise purchased including freight costa A purchase discount is the amount offered to the purchaser for delaying the payment to the seller Credit terms of a merchandising company are 1/15, net 40. This means that the buyer can receive a discount of the invoice is paid within 40 days of the in QUESTION 6 Handbags, Inc. had 400 units of Inventory on hand at the end of the year. These were recorded at a cost of $14 each using the last-in, first-out (LIFO) method. The current replacement cost is $10 per unit selling price charged by Handbags, Inc. for each finished product is $17. In order to record the adjusting entry needed under the lower-of-cost or market rule, the cost of Goods Sold will be credited by $4,000 debited by $4,000 credited by $1,000 debited by $1,600