Reference no: EM133131976
Questions -
Q1. As of December 321, 2021, Earth Mother's Corporation physical inventory was $275,000, and its book inventory was $290,000. The effect of the inventory shrinkage on the accounts is:
A. To increase Cost of Goods Sold and Inventory by $15,000
B. To increase Cost of Goods Sold and decrease Inventory by $15,000
C. To decrease Cost of Good Sold and increase Inventory by $15,000
D. To decrease Cost of Goods Sold and Inventory by $15,000
Q2. Office Outfitters Inc. which uses a perpetual inventory system, experienced an inventory shrinkage of $3,750. What accounts would be increased and decreased to record the adjustment for the inventory shrinkage at the end of the accounting period?
Q3. A retailer is considering the purchase of 100 units of a specific item from either of two suppliers. Their offers are as follows:
A: $780 a unit, total of $78,000, 1/10, n/30, plus freight of $1,500.
B: $800 a unit, total of $80,000, 2/10, n/30, no charge for freight.
Which of the two offers, A or B, yields the lower price?
Q4. A sale of merchandise on account for $5,000, terms n/30, is subject to an 8% sales tax.
(a) Should the sales tax be recorded at the time of sale or when payment is received?
(b) What is the amount of the sale?
(c) What is the amount of the increase to Accounts Receivables?
(d) What is the title of the account in which the $400 ($5,000 x 8%) is recorded?
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