PROF. K. JEFFERS ASA COLLEGE ACC 160 In its first year, FiCo, which uses the perpetual...

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PROF. K. JEFFERS ASA COLLEGE ACC 160 In its first year, FiCo, which uses the perpetual method and records purchases at net. b

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Answer to 6 The correct answer is C

On, june 25 as the payment is not done within 10 days, the discount is not applicable.

Therefore, inventory balance as at July 31 = [$4000 x (1-0.01)] + $2000 = $5960

Answer to 7 The correct answer is C

The journal entry will be:

Accounts payable Dr..............................$10000

To purchase discount................................................$200

To Cash.....................................................................$9800

Answer to 8 The correct answer is C

Under the periodic method, any change (increase/decrease) in inventory will affect COGS which is a part of both, income statement & ending balance of inventories in the balance sheet. Therefore, the year end adjustment under periodic statement will affect both, income statement & the balance sheet.

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