Travelli Co. sold merchandise to Trapani Co. on the account, $17,000, terms 2/15, net 45. The cost of the merchandise sold is $15,400. Travelli Co. issued an allowance for $1,750 for merchandise returned that originally cost $1,400. Trapani Co. paid the invoice within the discount period. What is amount of net sales from the above transactions?

a.$14,945

b.$17,000

c.$15,250

d. None of these choices are correct.

Roki Inc. uses the periodic inventory system and has the following data for the month of June:

June

1 On hand, 50 units @ $15.00 each $750.00

5 Purchased 115 units @ $15.10 each 1,736.50

14 Purchased 75 units @ $15.20 each 1,140.00

Total cost of goods available for sale $3,626.50

30 On hand, 90 units

How many units did Roki Inc. sell during June?

a.100

b.90

c.50

d.150

Chamberlain Company buys designer clothing to sell in its retail stores. Since much of the merchandise comes from Dallas and Europe, Chamberlain Company must pay freight charges to get the merchandise shipped in. Which of the following statements is true?

a. Transportation-in, paid by Chamberlain Company, is subtracted from purchases under the periodic system.

b. Transportation-in is added to net purchases to determine cost of goods purchased in a periodic system.

c. Freight charges are only paid by a buyer in a periodic system.

d. Transportation-in, paid by Chamberlain Company, is added to the inventory account under the periodic system.

For what reason might retailers like Target select an accounting period that ends on or near the end of January?

a. The company's CPAs are attempting to spread out the workload.

b. The Internal Revenue Service requires merchandise companies to select such a date for their fiscal year.

c. The company originally started business operations on that date so it is required to use the date as fiscal year-end.

d. Business activity is in a slow period that is suited to the preparation of its financial statements at the end of the year.

Which of the following statements is true?

a. Accounting standards require that merchandise costs be specifically traced to units left in inventory and to units that have been sold.

b. Accountants have developed methods which make assumptions concerning how costs should be assigned to inventory and cost of goods sold.

c. The flow of inventory costs should match the physical flow of the merchandise.

d. Alternative inventory cost-flow assumptions have the same effect on the amount of net income reported.

Which of the following statements regarding the application of the lower-of-cost-or-market (LCM) rule is true?

a. The LCM rule is most commonly applied on a total inventory basis because it is a more conservative approach.

b. When the LCM rule is used, inventories are valued at selling price.

c. The LCM rule is an exception to the historical cost principle.

d. Generally, market value is greater than replacement cost.