ABC Corporation uses the perpetual inventory method and the gross method for

recording purchases on account. On May 11, it purchased $44,000 of inventory, terms

2/10, n/30. On May 13, FBS returned goods that cost $4,000. On May 19, ABC paid the
supplier. On May 19, the company should credit

a) Purchase Discounts for $880.

b) Inventory for $880.
c) Purchase Discounts for $800.
d) Inventory for $800.

***($44,000 − $4,000) × 2% = $800.

IFRS exclude which of the following from the cost of inventory?

a) Most storage costs.

b) General administrative costs.
c) Selling costs.
d) All of these answer choices are excluded by IFRS.

Enriquez Exporters took a physical inventory on December 31 and determined that goods
costing €650,000 were on hand. Not included in the physical count were €10,000 of goods
purchased from Alberto Automotive, f.o.b. shipping point, and €31,000 of goods sold to Ro-Ro
Company for €40,000, f.o.b. destination. Both the Alberto purchase and the Ro-Ro sale were in
transit at year-end. What amount should Rodriquez report as its December 31 inventory?

December 31 inventory per physical count €650,000

Goods-in-transit purchased FOB shipping point 10,000
Goods-in-transit sold FOB destination 31,000
December 31 inventory €691,000

Inc Co. purchased $46,000 of inventory on June 1, 202x with credit terms of 2/10, n/30. Inc paid
the invoice on June 10.

Assuming that Bolt uses the perpetual method for recording inventory transactions, record the
purchase and payment using the gross method.

Inventory 46,000
Accounts payable 46,000

Accounts Payable 46,000

Inventory 920
Cash 45,080
46,000 x 2% = 920

Assuming that Inc uses the periodic method for recording inventory transactions, record the
purchase and payment using the gross method.

Purchases 46,000
Accounts payable 46,000

Accounts Payable 46,000

Purchase Discounts 920
Cash 45,080