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1. What is the nature of (a) a credit memorandum issued by the seller of merchandise, (b) a debit memorandum issued by the buyer of merchandise?
2. Who bears the transportation costs when the terms of sale are (a) FOB shipping point, (b) FOB destination?
3. When you purchase a new car, the "sticker price" includes a "destination" charge. Are you purchasing the car FOB shipping point or FOB destination? Explain.
4. Bernard Office Equipment, which uses a perpetual inventory system, experienced a normal inventory shrink- age of $19,290. (a) What accounts would be debited and credited to record the adjustment for the inventory shrinkage at the end of the accounting period? (b) What are some causes of inventory shrinkage?
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