(1) Purchase Discounts Lost should be:
A. Added to the Merchandise Inventory account to determine the cost of inventory on hand
B. Considered a loss account to be reported on the income statement
C. Included on the income statement as a financing expense for the period
D. Part of the cost of goods sold
(2) Orleans Enterprises purchased $37,500 of merchandise on account, terms 2/10, n/30. Assuming Orleans uses the net price method to account for purchase discounts, the journal entry to record the purchase would include a:
A. Debit to Inventory for $37,500
B. Credit to Accounts Payable for $36,750
C. Credit to Cash for $36,750
D. Debit to Purchase Discounts Lost for $750
(3) Hurricane Enterprises purchased $4,000 of merchandise on account, terms 2/10, n/30. Assuming Hurricane uses the gross price method to account for purchase discounts and it pays for the merchandise on the 9th day after the invoice date, which of the following would not be used in either the acquisition of the merchandise or the payment of the invoice :
A. Credit to Cash for $3,920
B. Credit to purchase discount for $80
C. Debit to Accounts Payable for $3,920
D. Debit to Purchase $4,000
(4) Bonita Industries purchased $5,000 of merchandise on account for resale purposes. Bonita plans to sell the merchandise for $7,500. If Bonita returned $1,000 of merchandise for credit, the journal entry to record the return would include a:
A. Debit to Accounts Payable for $1,000
B. Credit to Inventory for $1,500
C. Debit to Sales for $1,500
D. Credit to Cash for $1,000
(5) Kinsey Company had beginning inventory of $50,000, ending inventory of $54,000 and cost of goods sold of $240,000. What was the cost of goods purchased?
A. $294,000
B. $290,000
C. $244,000
D. $236,000