Question

02. GeCo begins 20X4 with merchandise costing $69,000. 20X4 sales are
$233,000, purchases are $198,000, and ending inventory is $81,000.
GeCo's 20X4 cost of goods sold is...
a. $245,000 b. $221,000 c. $210,000 d. $186,000
3. On December 3, HuCo purchases merchandise for $47,000 on account
F.O.B. destination. Freight charges are $800. On December 26, HUC
pays the vendor $14,000. On HuCo's December 31 balance sheet the
accounts payable balance will be...
a. $33,800
b. $47,000
c. $47,800
d. $33,000
4. RiCo uses the perpetual method for inventory and records purchases a
In 20X4, it has total merchandise purchases of $324,000. It retu

Answer 1

2. GeCo's 20X4 cost of goods sold is d. $186,000.

3. On HuCo's December 31 balance sheet the  accounts payable balance will be d. $33,000.

4. The net cost of RiCo's 20X4 merchandise purchases is a. $297,000.

Data and Calculations:

GeCo:

Beginning inventory = $69,000

Sales for he year = $233,000

Purchases =$198,000

Cost of goods available for sale = $267,000 ($69,000 + $198,000)

Ending inventory = $81,000

Cost of goods sold = $186,000 ($267,000 - $81,000)

HuCo:

Purchases on account = $47,000

Trade terms = FOB destination

Freight charges = $800 on the Seller

Payment on December 26 = $14,000

Accounts Payable balance = $33,000 ($47,000 - $14,000)

RiCo:

Merchandise Purchases = $324,000

Return of goods = $19,000

Purchases allowances = $7,000

Cash discount = $1,000.

Net cost of purchases = $297,000 ($324,000 - $19,000 - $7,000 - $1,000)

Question 4 Completion:

RiCo uses the perpetual method for inventory and records purchases at gross. In 20X4, it has total merchandise purchases of $324,000. It returns 19,000 of the merchandise for full credit and receives $7,000 in allowances from its vendors for defective merchandise and takes cash discount of $1,000. The net cost of RiCo's 20X4 merchandise purchases is... a. 297,000 b. 305,000 c.324,000 d. 298,000

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