22. Benz Inc. shows the following account balances for last month: Freight In Freight Out Purchases Purchase Discounts Sales Returns and Allowances The cost of goods purchased for last month is (a) $25,875 (b) $27,375 (c) $29,875 (d) $30.500. s 1,875 2,500 28,000 2,500 4,000 23. Under a periodic (a) Merchandise Inventory account. (b) Cost of Goods Sold account (c) Purchases account (d) Accounts Payable account. inventory system, purchase of merchandise is debited to the 24. In a periodic inventory system, the cost of goods sold is determined (a) at the beginning of the accounting period. (b) after each sale. (c) after each purchase. (d) at the end of the accounting period. 25. In order to determine cost of goods sold in a periodic inventory system we (a) add purchases to beginning inventory (b) subtract ending inventory from beginning inventory (e) subtract ending inventory from cost of goods available for sale. (d) subtract purchases from ending inventory Use the following information for questions 100-101. Use the following information to answer questions 26-27 The following information was available for Riley Limited at December 31. 2015: Beginning inventory Ending inventory Cost of goods sold Net sale.. S 120,000 150,000 810,000 1.400,000 26. Riley\'s inventory turnover was (a) 5.0 times. (b) 6.0 times. (c) 7.5 times. (d) 9.0 times. 27. Riley\'s days in inventory was (a) 40.6 days. (b) 48.7 days. (c) 60.8 days. (d) 73.0 days. 28. The lower of cost and net realizable value basis of valuing inventories ensures that inventories are (a) valued at their current cost. (b) valued at their selling price. (c) not under-valued. (d) not over-valued.
Answer of Part 22: The correct answer is b i.e. $27,375
Cost of Goods Purchased = Purchases – Purchase Discounts + Freight In
Cost of Goods Purchased = $28,000 - $2,500 + $1,875
Cost of Goods Purchased = $27,375
Answer of Part 23: The correct answer is c i.e. Purchases Account
Answer of Part 24: The correct answer is d i.e. at the end of the accounting period.
In periodic Inventory system the sale are accounted at the end of the accounting period but in perpetual inventory system sales are accounted at the time of sale
Answer of Part 25: The correct answer is c i.e. subtract ending inventory from cost of goods available for sale
To calculate cost of goods in a periodic inventory system we subtract ending inventory from cost of goods available for sale.
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