Tony's Market recorded the following events involving a recent purchase of inventory: Received...
Question:
Tony's Market recorded the following events involving a recent purchase of inventory:
Received goods for $80,000, terms 2/10, n/30.
Returned $1,600 of the shipment for credit.
Paid $400 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company's inventory:
a. increased by $76,832
b. increased by $78,800
c. increased by $77,224
d. increased by $77,232
Accounting for inventory purchases:
Merchandise is goods, which the company purchases and resells the same to customers. The merchandiser will account the purchases in his books by using any of the one inventory systems. These are the Perpetual Inventory System and the Periodic Inventory System. The inventory value of purchases will be shown of the net amount paid to the purchase invoice, and the cost of transportation from the vendor location to the company warehouse will be added to purchase cost.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerThe following will be taken as inventory value for the purchases
- the gross purchase cost is $80,000
- the purchase return is $1,600
- the Net purchases...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Accounting for Inventory Purchases
from
Chapter 6 / Lesson 4
13K
Accounting of inventory purchases, or merchandise that is stored to be sold directly to customers, involves calculating far more than simple stock and unit costs. Learn how the original price, discounts, returns/allowances, transportation, and ownership/transfer fees are all factored into accounting for inventory purposes.
Related to this Question
- Tony's Market recorded the following events involving a recent purchase of inventory: Received goods for $40,000, terms 2/10, n/30. Returned $800 of the shipment for credit. Paid $200 freight on the shipment. Paid the invoice within the discount period. A
- Tony's Market used the perpetual method to record the following events involving a recent purchase of inventory: -Received goods for $84,600, terms 2/9, n/30. -Returned $1,900 of the shipment for credit. -Paid $300 freight on the shipment. -Paid the i
- Tony's Market used the perpetual method to record the following events involving a recent purchase of inventory: -Received goods for $80000, terms 2/10, n/30. -Returned $1600 of the shipment for credit. -Paid $400 freight on the shipment. -Paid the in
- Tony's market, which uses a perpetual inventory system, recorded the following events involving a recent purchase of inventory: - received goods for 30,000, terms 2/10, n/30 (recorded discount upon receipt of goods) - returned $600 of the shipment for cre
- Stan's Market recorded the following events involving a recent purchase of inventory: Received goods for $90,000, terms 2/10, n/30. Returned $1,800 of the shipment for credit. Paid $450 freight on the shipment. Paid the invoice within the discount period.
- Stan's Market recorded the following events involving a recent purchase of inventory: 1. Received goods for $90,000, terms 2/10, n/30. 2. Returned $1,800 of the shipment for credit. 3. Paid $450 freight on the shipment. 4. Paid the invoice within the disc
- Wilma's Foods recorded the following events involving a recent purchase of inventory: Received goods for $25,000, terms 2/10, n/30. Returned $800 of the shipment for credit. Paid $200 freight on the shipment. Paid the invoice within the discount period. T
- Jake's Market recorded the following events involving a recent purchase of merchandise: Received goods for $20,000, terms 2/10, n/30. Returned $400 of the shipment for credit. Paid $100 freight on the shipment. Paid the invoice within the discount period.
- The following transactions occurred in March of the current year. 5th: Established a Petty Cash fund for $250. 6th: Paid $12.50 COD shipping charges on merchandise for resale, terms FOB shipping poi
- Journalize the following transactions for Martin Bicycles using the periodic inventory system. Nov. 2 Purchased $2,800 of merchandise inventory on account under terms 3/10, n/EOM, and FOB shipping point from Shook Bikes Nov. 6 Returned $500 of defective m
- Complete the following journal entries for purchase transactions under the perpetual inventory system. a. Purchase $5,000 of merchandise on January 5th, plus $150 in freight charges. Terms are 2/10, n/30. No discount on freight charges. b. Return $600 of
- WyCo has the following account balances: Purchase Returns $19,000; Purchases $812,000; Purchase Discounts $8,000; Beginning inventory $21,000; Freight In $30,000; and Ending inventory $37,000.
- Stuart Company purchased goods for $84,000 on June 14, under the following terms: 3/10, n/ 30; FOB shipping point, freight collect. The bill for the freight was paid on June 15, $1,200. Stuart Company uses the perpetual inventory method. Assume that the
- For the current fiscal year, Purchases were $245,000, Purchase Returns and Allowances were $8,600, Purchase Discounts were $2,200 and Freight In was $32,000. If the beginning merchandise inventory was $60,000 and the ending merchandise inventory was $75,0
- For the current fiscal year, Purchases were $265,000, Purchase Returns and Allowances were $8,300, Purchase Discounts were $2,300 and Freight In was $33,000. If the beginning merchandise inventory was $62,000 and the ending merchandise inventory was $79,0
- For the current fiscal year, Purchases were $340,000, Purchase Returns and Allowances were $9,800, Purchase Discounts were $3,800 and Freight In was $48,000. If the beginning merchandise inventory was $69,500 and the ending merchandise inventory was $94,0
- For the current fiscal year, Purchases were $300,000, Purchase Returns and Allowances were $9,000, Purchase Discounts were $3,000 and Freight In was $40,000. If the beginning merchandise inventory was $65,500 and the ending merchandise inventory was $86,0
- For the current fiscal year, Purchases were $310,000, Purchase Returns and Allowances were $9,200, Purchase Discounts were $3,200 and Freight In was $42,000. If the beginning merchandise inventory was $66,500 and the ending merchandise inventory was $88,
- The following are several items that the controller of the Golosow Company has questioned regarding their inclusion in Inventory: 1. An invoice has been received for goods ordered. The goods were shipped FOB destination but have not been received. 2. Purc
- A retailer that uses a perpetual inventory system purchased $8,000 of merchandise on credit. The credit terms were 2/10, n/30, and FOB shipping point. The freight costs were $130. What was the journal entry to record the purchase? A. Merchandise Inventory
- All of the following statements are true about sales order procedures except: a. The shipping department uses the bill of lading and shipping notice to reconcile goods received from the warehouse. b. The stock release provides authorization to the wareh
- Bargen Co. entered into the following transactions involving short-term liabilities in 2010 and 2011. 2010 Apr. 22 Purchased $4,000 of merchandise on credit from Quinn Products, terms are 1/10, n/30. Bargen uses the perpetual inventory system. May 23 Repl
- For the current fiscal year, Purchases were $170,000, Purchase Returns and Allowances were $3,200 and Freight In was $11,000. If the beginning merchandise inventory was $120,000 and the ending merchandise inventory was $77,000, the Cost of Goods Sold is?
- For the current fiscal year, Purchases were $160,000, Purchase Returns and Allowances were $3,100 and Freight In was $10,000. If the beginning merchandise inventory was $115,000 and the ending merchandise inventory was $76,000, the Cost of Goods Sold is:
- Complete the following journal entries for sales transactions under the perpetual inventory system. a. Sell $8,000 of merchandise on July 19th. Terms are 2/10, n/30. The merchandise cost $3,500. b. The customer returns $1,000 of merchandise purchased on J
- Avanti purchases inventory from overseas and incurs the following costs: the merchandise cost is $50,000, credit terms 2/10, n/30 that apply only to the $50,000; FOB shipping point freight charges are $1,500; insurance during transit is $500, and import d
- Use the following transactions to determine cost of goods sold: 1) Your Company purchased merchandise inventory that cost $10,000 under terms of 2/10, n/30 and F.O.B. shipping point. 2) Your Company
- Tony Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $36,900. Purchases since January 1 were $77,700; freight-in, $3,700; purchase return
- A company has the following transactions during March: March 3 Purchases inventory on account for $3,300, terms 3/10, n/30. March 5 Pays freight costs of $300 on inventory purchased on March 3. Mar
- The following transactions were completed by Niles Co. during March of the current year: March 1: Purchased merchandise from Haas Co., $43,250, terms FOB shipping point, 2/10, n/eom. Prepaid freight
- A sales invoice included the following information: Merchandise price $6000: transportation $300 terms 2/10 n/ecm, FOB shipping point. Assuming that a credit for merchandise returned of $600 is grante
- The following transactions were completed by Flashpoint Inc. for the month of March. The company uses the perpetual system for merchandising transactions. 5 Mar. - Purchased merchandise from Mobley Co. for $9,000 under credit terms of 1/15, n/30, FOB shi
- For the current fiscal year, Purchases were $260,000, Purchase Returns and Allowances were $4,100 and Freight In was $20,000. If the beginning merchandise inventory was $165,000 and the ending merchandise inventory was $86,000, the Cost of Goods Sold is _
- The following items were selected from among the transactions completed by Sherwood Co. during the current year: Mar.1 Purchased merchandise on account from Kirkwood Co., $175,000, terms n/30. 31 Issu
- Anthony Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. Date Activities Units Acquired at Cost Units Sold at Retail Mar. 1 Beginni
- ABC purchases $10,000 of inventory on March 5, terms 2/10, n/30, fob shipping point. Freight was $100. The payment was made on March 15 for: a. $9,800. b. $9,900. c. $10,000. d. $10,100.
- Petersen Book Store entered into the transactions listed below. -July 6 Purchased $1,600 of merchandise on credit, terms n/30. -8 Returned $100 of the items purchased on July 6. -9 Paid freight cha
- For the current fiscal year of 2019, purchases were $187,000, purchase returns and allowances were $4,200 and freight in was $10,500. If the beginning merchandise inventory was $98,000 and the ending merchandise inventory was $103,000, the net delivered c
- The following information is available for the Johnson Corporation for 2013: Beginning inventory $ 25,000 Merchandise purchases (on account) 155,000 Freight charges on purchases (paid in cash) 10,000 Merchandise returned to supplier (for credit) 12,00
- Anthony Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. Date Activities Units Acquired at Cost Units Sold at Retail Mar. 1 Beginning inventory 200 units @ $53.00/unit Mar. 5 Purchase 275
- Napier Co. provided the following information on selected transactions during 2011: Purchase of Furniture $250,000 Proceeds from issuing stocks 500,000 Purchases of inventory 950,000 Purchases of treasury stock 150,000 Loans made to affiliated corporatio
- A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $4,000 Transportation In, $450 Purchases, $12,000 Purchases Return
- The following selected transactions were complete by Burton Company during July of the current year. Burton Company uses the periodic inventory system. July 2. Purchased $24,000 of merchandise on account, FOB shipping point, terms 2/15, n/30. 5. Paid fre
- Anthony Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. Mar. 1 Beginning inventory 50 units @ $50/unit Mar. 5 Purchase 200 units @ $55/unit Mar. 9 Sales 210 units @ $85/unit Mar. 18
- The following selected transactions were complete by Britt Co. during October of the current year: Oct. 1 Purchased merchandise from Mable Co., $17,500, terms FOB shipping point, 2/10, n/eom. Prepaid freight of $300 was added to the invoice. 5. Purchased
- A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $3,600; Freight-In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The co
- Vasquez Ltd. is a retailer operating in Edmonton, Alberta. Vasquez uses the perpetual inventory method. All sales returns from customers result in the goods being returned to inventory; the inventory is not damaged. Assume that there are no credit transac
- The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year: |Feb. 15|Purchased merchandise on account from Hood Co., $288,000, terms n/30
- The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year: Feb. 15.Purchased merchandise on account from Hood Co., $276,000, terms n/30.
- Record the following transactions that occurred during March 2019 for Harris Manufacturing Company, which uses the perpetual inventory system: Mar. 12 Transferred $35,000 of completed goods from the factory to the warehouse. 15 Requisitioned $21,000 of ma
- The following is a list of selected events for Unger Sales and Service for 2012. Unger uses a perpetual inventory system and had a zero inventory balance prior to these transactions. 1) Purchased merchandise on account for $67,000. 2) Sold inventory cos
- Consider the following facts: Company A's accounting records at the end of the year shows the following: Purchase Discounts, $5,600; Freight In, $7,800; Purchases, $201,000; Beginning Inventory, $23,5
- What account is debited when the completely manufactured goods are transferred out of the work in process inventory? a. Raw Materials inventory b. Goods in Process inventory c. Finished Goods inventory d. Cost of Goods Sold
- Journalize the following transactions for the Evans Company. Assume the company uses a perpetual inventory system. 11/17 Sold merchandise for $645. The cost of merchandise sold was $375. 11/18 Sold merchandise for $432 and accepted VISA as the form of pay
- Merchandise with an invoice price of $4,000 is purchased subject to terms of 2/10, n/30, and FOB destination. Transportation costs paid by the seller totaled $150. What is the cost of the merchandise, assuming the discount is taken? A. $4,070 B. $3,920 C
- A company has the following transactions during March: March 3 Purchases inventory on account for $3,900 terms 4/10, n/30 March 5 Pays freight costs of $230 on inventory purchased on March 3. March
- The following items were selected from among the transactions completed by Emerald Bay Stores Co during the current year Feb 15 Purchased merchandise on account from Hood Co 144000 terms n 30 Mar 17 I
- For each of the following events, indicate whether the freight terms are FOB destination or FOB shipping point. Event FOB Destination or FOB Shipping Point a. Sold merchandise and paid the freight cos
- Consider the following situation: Purchased merchandise was shipped FOB shipping point on the last day of the year. The cost of the merchandise was not included in ending inventory. Which of the following would be the impact of the given situation on the
- A company purchased $11,800 of merchandise on June 15 with terms of 3/10, n/45, and FOB shipping point. The freight charge was $1,400 and was prepaid by the sellers. On June 20, it returned $2,240 of that merchandise. On June 24, it paid the balance owed
- If title to merchandise purchases passes to the buyer when the goods are delivered to the buyer, the terms are: a. consigned b. n/30 c. FOB shipping point d. FOB destination
- Consider the following item: Freight charges on goods purchased. Indicate if the given item would be reported as inventory in the financial statements of a company with year end at December 31. If it should not be reported as inventory, indicate how it sh
- Goods purchased FOB shipping point: A. can reduce the price of items purchased B. is updated with each transaction C. requires the buyer to pay shipping costs D. is complete when cash is received for goods sold E. is equal to Sales Revenue - Sales Returns
- Cost of goods sold is debited and finished goods inventory is credited for: a. transfer of goods to the finished goods storeroom. b. purchase of goods on account. c. the sale of goods to a customer. d. transfer of materials into work in process inventory.
- Napier Co. provided the following information on selected transactions during 2011: Purchase of Furniture $250,000 Proceeds from issuing stocks 500,000 Purchases of inventory 950,000 Purchases of treasury stock 150,000 Loans made to affiliated corporation
- Journalize the following transactions for both Abbott Co. (seller) and Dalton Co. (buyer). Assume both of the companies use the perpetual inventory system. July 3 Abbott Co. sold merchandise on accou
- Journalize the following transactions for Armour Inc. using both the periodic inventory system and the perpetual inventory system. Oct.7 Sold merchandise on credit to Rondo Distributors, terms n/30,
- The following selected transactions were completed by Padre Co. during October of the current year: Oct. 1. Purchased merchandise from Wood Co., $15,500, terms FOB shipping point, 2/10, n/eom. Prepaid freight of $400 was added to the invoice. 5. Purchas
- Consider the following situation: Merchandise was purchased FOB destination on the last day of the year. The cost of the merchandise purchased was not included in ending inventory. Which of the following would be the impact of the given situation on the
- Cost of goods sold is debited and finished goods inventory is credited for: a. transfer of materials into work in process inventory, b. purchase of goods on account, c. transfer of goods to the finished goods storeroom, d. the sale of goods to a customer.
- The following items were included in Venicio Corporation's inventory account on December 31, 2007: Merchandise out on consignment, at sales price, including 40% markup on selling price $14,000 Goods purchased, in transit, shipped F.O.B. shipping point 1
- The following are selected transactions of Wilson Inc.: April 20. Sold on account to Acme Stores merchandise for $900 Terms FOB shipping point 2/10, n/30. The freight charges Paid were $85. Merchandi
- 1. Benz Inc. shows the following account balances for last month: Freight In $1,875 Freight Out 2,500 Purchases 28,000 Purchase Discounts 2,500 Sales Returns and Allowances 4,000 The cost of goods pu
- Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account? a. Freight Expense b. Freight-In c. Merchandise Inventory d. Freight-Out
- A sale is recorded when goods leave the seller's shipping department when the merchandise is shipped: - Goods in transit, shipped collect. - FOB destination. - FOB shipping point. - Freight-out, s
- Journalize the August transactions for Beartooth Co. The following selected transactions were completed during August between Summit Co. and Beartooth Co.: |Aug.1|Summit Co. sold merchandise on acco
- The following transactions occurred during January 2018: Jan.1 Sold merchandise for cash, $2,900. The cost of the merchandise was $1,400. The company uses the perpetual inventory system. 2 Purchased
- Merchandise with an invoice price of $5,000 is purchased on September 2 subject to terms of 2/10, n/30, and FOB destination. Freight costs paid by the seller totaled $200. What is the cost of the merchandise if paid on September 12, assuming the discount
- The following selected transactions were completed by Epic Co. during August of the current year: Aug. 3. Purchased merchandise for $33,400, terms FOB destination, 2/10, n/30. 9. Issued debit memorand
- Merchandise with an invoice price of $4,600 is purchased subject to terms of 2/10, n/30, FOB shipping point. The seller prepaid $75 for the cost of transportation. What is the amount that the purchaser records as the cost of the merchandise at the time of
- Under a periodic inventory system, the buyer does not use which of the following accounts in recording the acquisition of merchandise inventory and related transactions? Purchases Purchase Returns a
- The following transactions are for Kale Company. Journalize sales transactions 1. On December 3, Kale Company sold $480,000 of merchandise to Thomson Co., terms 1/10, n/30. The cost of the merchandise
- Record the journal entries for the following transactions that occurred during the month of March for Magic Merchandisers. Inc using a perpetual inventory system. Mar. 1^st: Purchased merchandise on a
- Assume the perpetual inventory method is used. 1) Green Company purchased merchandise inventory that cost $16,300 under terms of 4/10, n/30 and FOB shipping point. 2) The company paid freight cost of $630 to have the merchandise delivered. 3) Payment was
- Which of the following accounts will normally appear in the ledger of a merchandising company that uses a perpetual inventory system? a. Purchases b. Freight-in c. Cost of Goods Sold d. Purchase Discounts
- A business purchased merchandise for $12,000 on account; terms are 2/10, n/30. If $2,000 of the merchandise was returned and the remaining amount due was paid within the discount period, the purchase discount would be: a. $240 b. $200 c. $1,200 d. $1
- A business purchased merchandise for $12,000 on an account; terms are 2/10, n/30. If $2,000 of the merchandise was returned and the remaining amount due was paid within the discount period, the purchase discount will be: a. $240 b. $200 c. $1,200 d. $
- A sales invoice included the following information: merchandise price, $75,100; transportation, $1,500; terms 1/10, n/30, FOB shipping. Assuming that merchandise that cost $3,800 is returned before it has been paid for, that the transportation is prepaid
- The following is a list of selected events for Unger Sales and Service for the year 2012. Unger uses a perpetual inventory system and had a zero inventory balance prior to these transactions. 1) Purchased merchandise on account for $67,000. 2) Sold inve
- Assuming the periodic inventory method is used for the current period, the following data were taken from the ledger. Purchases $40,000 Purchases Returns and Allowances $600 Discount Received $300 Freight-in $200 Beginning Inventory was $8,000 and Ending
- A company purchased $11,100 of merchandise on June 15 with terms of 2/10, n/45, and FOB shipping points. The freight charge was $1,050. On June 20, it returned $1,680 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any
- The amount recorded for merchandise inventory includes all of the following except: a. purchase discounts b. returns and allowances c. trade discounts d. freight costs paid by the buyer e. freight costs paid by the seller
- Vargo Company engaged in the following transactions in August 2011: Aug. 7 Sold merchandise on credit to Ken Smith, terms n/30, FOB shipping point, $3,000 (cost, $1,800). 8. Purchased merchandise on credit from Novak Company, terms n/30, FOB shipping poi
- Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account? a. Freight Expense b. Freight-In c. Inventory d. Freight-Out
- A sales invoice included the following information: merchandise price, $50,600; transportation, $1,900; terms 2/10, n/30, FOB destination. Assuming that merchandise that cost $4,900 is returned before it has been paid for, that the transportation is paid
- Under the perpetual inventory system, the entry to record a purchase return would include a credit to: A) Accounts Payable. B) Purchases Returns and Allowances. C) Cost of Goods Sold. D) Merchandise Inventory.
- JaCo uses the periodic method and records merchandise purchases on the net. Its 20X4 ending inventory is $69,000. During 20X5, JaCo purchases merchandise for $878,000, with freight-in of $11,000. Purchase returns are $17,000, purchase discounts lost are $
- Stone Co had the following consignment transactions during December: Inventory shipped on consignment to Beta Co. $18,000 Freight paid by Stone $900 Inventory received on consignment from Alpha Co. $12,000 Freight paid by Alpha $500 No sales of consigned
- Consider the following item: Goods purchased f.o.b. shipping point that are in transit at December 31. Indicate if the given item would be reported as inventory in the financial statements of a company with year end at December 31. If it should not be rep
- Tsang Company purchased $32,000 of inventory on account with payment terms of 2/10, n/30 and freight terms FOB shipping point. Freight costs were $1,100. Tsang obtained a $2,000 purchase allowance because the inventory was damaged upon arrival. Tsang paid
Explore our homework questions and answers library
Browse
by subject