ACC 231 Exam 2 Test Prep

ACC 231 Exam 2 Test Prep Multiple Choice Identify the choice that best completes the statement or answers the question. 1. West, Inc. had beginning inventory of $10,000, purchases of $25,000 and ending inventory of $5,000. What is West's cost of merchandise sold? a. $10,000 b. $25,000 c. $5,000 d. $30,000 2. If a company purchased $2,000 of merchandise on account and paid for it during the discount period with the terms of 2/10, n/30, and the company uses the perpetual inventory system, the journal entry would be . a. Accounts Payable 2,000 Cash 2,000 b. Merchandise Inventory 2,000 Accounts Payable 2,000 c. Accounts Payable 1,960 Merchandise Inventory 1,960 d. Accounts Payable 2,000 Merchandise Inventory 40 Cash 1,960 3. If a $10,000 sale is made on January 1st, with terms of 2/10, n/30 how much would the discount be if payment is made on January 9th? a. $10,000 b. $200 c. $1,000 d. $0 4. When the LIFO method is used, cost of merchandise sold is assumed to consist of . a. The most recently purchased units b. The oldest units c. The units with the highest per unit cost d. The units with the lowest per unit cost 5. Which of the following entries are required to record the cost of merchandise sold under a perpetual inventory system? a. Cost of Merchandise Sold XXX Merchandise Inventory XXX b. Cost of Merchandise Sold XXX Purchases XXX c. Merchandise Inventory XXX Cost of Merchandise Sold XXX d. Purchases XXX Cost of Merchandise Sold XXX Freight-in 1,000 18. Given this information, gross margin is a. $86,000 b. $94,000 c. $106,000