Reference no: EM133071649

Question - An analysis of the ending inventory account of Phil Company on December 31, 2021, disclosed the inclusion of the following items:

Merchandise in transit purchased on terms:

FOB shipping point 165,000

FOB destination 100,000

Merchandise out on consignment at sales price (including mark up of 30% on cost) 195,000

Merchandise sent to a customer for approval (cost of goods, P32,000) 42,000

Merchandise held on consignment 35,000

1. What is the reduction in the inventory of Phil?

a. 190,000

b. 222,000

c. 355,000

d. 203,500

2. Which account is not classified as a selling expense?

a. Sales Discounts

b. Sales Salaries

c. Advertising Expense

d. Transportation-Out

3. Which of the following accounts has a normal credit balance?

a. Merchandise Inventory

b. Transportation Out

c. Sales Returns and Allowances

d. Sales

4. Which of the following accounts has a normal debit balance?

a. Sales

b. Sales Returns and Allowances

c. Accounts Payable

d. Interest Revenue

5. Which of the following accounts should be closed to Income Summary at the end of the fiscal year?

a. Drawing

b. Cost of Merchandise Sold

c. Accumulated Depreciation

d. Merchandise Inventory

6. Which of the following items should be excluded from a company's inventory at the end of the reporting period?

a. Goods lost while in transit, which were purchased FOB shipping point.

b. Goods in transit purchased FOB shipping point

c. Goods held by customers on approval or on trial

d. Goods out on consignment

7. Which of the following items should be included in a company's inventory at the end of the reporting period?

a. Goods sold to a customer, which are being held for the customer to call for at the customer's convenience.

b. Goods in transit, which were purchased, FOB destination.

c. Goods received from another company for sale on consignment.

d. Goods in transit, which were purchased FOB shipping point.