Under the gross method purchase discounts taken are a

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Income Tax Fundamentals 2020
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Chapter 3 / Exercise 3.2
Income Tax Fundamentals 2020
Altus-Buller/Whittenburg
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28.Under the gross method, purchase discounts taken are:  A. Deducted from interest expense.B.  Added to net purchases.C.  Added to interest income.D.  Deducted from purchases.
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Income Tax Fundamentals 2020
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Chapter 3 / Exercise 3.2
Income Tax Fundamentals 2020
Altus-Buller/Whittenburg
Expert Verified
 AACSB: Reflective ThinkingAICPA BB: Critical ThinkingBlooms: RememberDifficulty: 2 MediumLearning Objective: 08-03 Determine the expenditures that should be included in the cost of inventory.Topic: Determine the expenditures that should be included in the cost of inventory 29.Alison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17 and received an invoice with a list price amount of $6,000 and payment terms of 2/10, n/30. Alison uses the net method to record purchases. Alison should record the purchaseat:  
 AACSB: AnalyticAICPA FN: MeasurementBlooms: ApplyDifficulty: 2 MediumLearning Objective: 08-03 Determine the expenditures that should be included in the cost of inventory.Topic: Determine the expenditures that should be included in the cost of inventoryNorthwest Fur Co. started 2013 with $94,000 of merchandise inventory on hand. During 2013, $400,000 in merchandise was purchased on account with credit terms of 1/15, n/45. All discounts were taken. Purchases were all made f.o.b. shipping point. Northwest paid freight charges of $7,500. Merchandise with an invoice amount of $5,000was returned for credit. Cost of goods sold for the year was $380,000. Northwest uses a perpetual inventory system.30.What is ending inventory assuming Northwest uses the gross method to record purchases?    
 AACSB: AnalyticAICPA FN: MeasurementBlooms: ApplyDifficulty: 3 HardLearning Objective: 08-03 Determine the expenditures that should be included in the cost of inventory.Topic: Determine the expenditures that should be included in the cost of inventory 31.Assuming Northwest uses the gross method to record purchases, what is the cost of goods available for sale?  
 AACSB: AnalyticAICPA FN: MeasurementBlooms: ApplyDifficulty: 3 HardLearning Objective: 08-03 Determine the expenditures that should be included in the cost of inventory.Topic: Determine the expenditures that should be included in the cost of inventory Cinnamon Buns Co. (CBC) started 2013 with $52,000 of merchandise on hand. During 2013, $280,000 in merchandise was purchased on account with credit terms of 2/10, n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,000. Merchandise with an invoice amount of $4,000 was returned for credit. Cost of goods sold for the year was $316,000. CBC uses a perpetual inventory system.32.Assuming CBC uses the gross method to record purchases, ending inventory would be:   A. $6,480.B.  $15,400.C.  $15,480.D.  $21,000.
 AACSB: AnalyticAICPA FN: MeasurementBlooms: ApplyDifficulty: 3 HardLearning Objective: 08-03 Determine the expenditures that should be included in the cost of inventory.Topic: Determine the expenditures that should be included in the cost of inventory 

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