2024 – 1 Merchandise inventory A is a long term asset B is a current asset C

1. Merchandise inventory: 

A) is a long-term asset. 

B)is a current asset. 

C) includes supplies. 

D) is classified with investments on the balance sheet. 

E) Must be sold within one month. 

 

2. The credit terms 2/10, n/30 are interpreted as: 

A) 2% cash discount if the amount is paid within 10 days, with the balance due in 30 days. 

B) 10% cash discount if the amount is paid within 2 days, with the balance due in 30 days. 

C) 30% discount if paid within 2 days. 

D) 30% discount if paid within 10 days. 

E) 2% discount if paid within 30 days. 

 

3. On October 1, Robinson Company sold merchandise in the amount of $5,800 to Rosser, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robinson uses the perpetual inventory system. The journal entry or entries that Robinson will make on October 1 is: 

A)Sales…………………………5,800 

       Sales receivable ………….       5,800 

B)Sales…………………………5,800 

       Accounts Receivable………..       5,800 

Cost of goods sold……………..4,000 

       Merchandise inventory………       4,000 

C)Accounts Receivable…………….5,800 

       Sales…………………….       5,800 

D)Accounts Receivable…………….5,800 

       Sales…………………….       5,800 

Cost of Good Sold………………4,000 

       Merchandise Inventory………       4,000 

E)Accounts Receivable…………….4,000 

       Sales…………………….       4,000 

 

4. On October 1, Whaley Company sold merchandise in the amount of $5,800 to Lee Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Whaley uses the perpetual inventory system. Lee pays the invoice on October 8, and takes the appropriate discount. The journal entry that Whaley makes on October 8 is: 

A)Cash………………………….5,800 

      Accounts Receivable…………       5,800 

B)Cash………………………….4,000 

      Accounts Receivable…………       4,000 

C)Cash………………………….3,920 

Sales Discount…………………   80 

      Accounts Receivable…………       4,000 

D)Cash………………………….5,684 

      Accounts Receivable…………       5,684 

E)Cash………………………….5,684 

Sales Discount………………… 116 

      Accounts Receivable…………       5,800