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1. On January 28 Wild\'s Flowers purchased from a supplier 30 vases for $10 each

ID: 2434747 • Letter: 1

Question

1. On January 28 Wild's Flowers purchased from a supplier 30 vases for $10 each ($300) and also paid $30 of freight under terms 2/10, n/30, FOB shipping point. The vases will be sold at its new flower shop. No other vases were in stock. Wild's Flowers uses a perpetual inventory system and prepares month financial statements.

Which one of the following is correct (true) with respect to the recording of the purchases of the vases on January 28?

a) COGS is not recorded (and inventory is recorded) because the matching principle must be followed.
b) If the vases are sold within 30 days, Wild's Flowers can take a discount of 2% - 10% depending upon when the vases were sold.
c) If Wild's Flowers pays the bill for the vases within 30 days, they can take a 2% discount.
d) Inventory is credited.

2. On January 28 Wild's Flowers purchased from a supplier 30 vases for $10 each ($300) and also paid $30 of freight under terms 2/10, n/30, FOB shipping point. The vases will be sold at its new flower shop. No other vases were in stock. Wild's Flowers uses a perpetual inventory system and prepares month financial statements.

On February 2, a customer purchased two of the vases for $20 each. Which one of the following is the appropriate entry(s) that should be made on February 2?

a) COGS         22
         Inventory         22
Cash               40
         Sales               40
b) Cash            40
       Sales                  40 c) COGS               20
       Inventory            20
Cash                  40
       Sales                  40 d) Inventory Expense         20
         Inventory                  20
Cash               40
         Sales               40
1. On January 28 Wild's Flowers purchased from a supplier 30 vases for $10 each ($300) and also paid $30 of freight under terms 2/10, n/30, FOB shipping point. The vases will be sold at its new flower shop. No other vases were in stock. Wild's Flowers uses a perpetual inventory system and prepares month financial statements.

Which one of the following is correct (true) with respect to the recording of the purchases of the vases on January 28?

a) COGS is not recorded (and inventory is recorded) because the matching principle must be followed.
b) If the vases are sold within 30 days, Wild's Flowers can take a discount of 2% - 10% depending upon when the vases were sold.
c) If Wild's Flowers pays the bill for the vases within 30 days, they can take a 2% discount.
d) Inventory is credited.

2. On January 28 Wild's Flowers purchased from a supplier 30 vases for $10 each ($300) and also paid $30 of freight under terms 2/10, n/30, FOB shipping point. The vases will be sold at its new flower shop. No other vases were in stock. Wild's Flowers uses a perpetual inventory system and prepares month financial statements.

On February 2, a customer purchased two of the vases for $20 each. Which one of the following is the appropriate entry(s) that should be made on February 2?

a) COGS         22
         Inventory         22
Cash               40
         Sales               40
b) Cash            40
       Sales                  40 c) COGS               20
       Inventory            20
Cash                  40
       Sales                  40 d) Inventory Expense         20
         Inventory                  20
Cash               40
         Sales               40

Explanation / Answer

1. On January 28 Wild's Flowers purchased from a supplier 30 vases for $10 each ($300) and also paid $30 of freight under terms 2/10, n/30, FOB shipping point. The vases will be sold at its new flower shop. No other vases were in stock. Wild's Flowers uses a perpetual inventory system and prepares month financial statements. Which one of the following is correct (true) with respect to the recording of the purchases of the vases on January 28? d) Inventory is credited. 2. On January 28 Wild's Flowers purchased from a supplier 30 vases for $10 each ($300) and also paid $30 of freight under terms 2/10, n/30, FOB shipping point. The vases will be sold at its new flower shop. No other vases were in stock. Wild's Flowers uses a perpetual inventory system and prepares month financial statements. On February 2, a customer purchased two of the vases for $20 each. Which one of the following is the appropriate entry(s) that should be made on February 2? a) COGS 22 Inventory 22 Cash 40 Sales 40