Question

I tried to answer A, but it is not correct!

b. $31. a $15,600 11. JaCo uses the periodic method and records merchandise purchases at 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 $4,000, and the cost of merchandise on hand at year end is $91,000. At year end, JaCo records the following entry: 91,000 17,000 850,000 878,000 11,000 69,000 a. Ending Inventory Purchase Returns Cost of Goods Sold Purchases Freight-In Beginning Inventory b. Ending Inventory Purchase Returns Cost of Goods Sold Purchase Discounts Lost Purchases Freight-In Beginning Inventory 91,000 17,000 846,000 4,000 878,000 11,000 69,000 c. Ending Inventory Purchase Returns Cost of Goods Sold Purchases Freight-In Beginning Inventory Purchase Discounts Lost 91,000 17,000 854,000 878,000 11,000 69,000 4,000 d. Beginning Inventory Purchase Returns Cost of Goods Sold Purchases Freight-In Ending Inventory 69,000 17,000 894,000 878,000 11,000 91,000

Answer 1

Answer.

Option C is correct.

Purchase Discounts Lost is considered to be an expense (as opposed to being a cost of the goods).

The account Purchase Discounts Lost is found in the general ledger of a company that records vendors' invoices using the net method. An amount is entered in Purchase Discounts Lost only when the company fails to pay an invoice within the vendor's discount period.

Hence option C is correct.

And other things remaining common as purchase,opening inventory,freight etc.have been credited as against Cost of goods sold.

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