QQuestionAccounting
QuestionAccounting
Goods in transit are included in a purchaser's inventory:
Multiple Choice
At any time during transit.
When the goods are shipped FOB shipping point.
When the supplier is responsible for freight charges.
If the goods are shipped FOB destination.
After the half-way point between the buyer and seller.
Goods in transit are included in a purchaser's inventory:
Multiple Choice
At any time during transit.
When the goods are shipped FOB shipping point.
When the supplier is responsible for freight charges.
If the goods are shipped FOB destination.
After the half-way point between the buyer and seller.
Multiple Choice
Debit Income Summary $13,000; credit Owner's, Capital $13,000.
Debit Income Summary $75,000; credit Revenues $75,000.
Debit Revenues $75,000; credit Income Summary $75,000.
Debit Income Summary $62,000; credit Expenses $62,000.
Debit Owner's, Capital $8,000, credit Owner's, Withdrawals $8,000.
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Answer
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Step 1:: Identify when goods in transit are included in a purchaser's inventory.
The correct option is "At any time during transit." Goods in transit are considered part of the purchaser's inventory from the moment they are shipped until they are received, regardless of the terms of the sale or who is responsible for freight charges.
Step 2:: Record the journal entry for goods in transit.
Since the goods are already included in the purchaser's inventory during transit, no journal entry is required specifically for this situation.
Step 3:: Select the correct journal entry for adjusting the Income Summary account.
The correct option is "Debit Income Summary $62,000; credit Expenses $62,000." This journal entry indicates that the company has recorded $62,000 in expenses, which have been accumulated in the Income Summary account.
Now, the company is transferring these expenses to the proper expense accounts.
Step 4:: Select the correct journal entry for adjusting the Owner's Capital account.
The correct option is "Debit Owner's, Capital $8,000, credit Owner's, Withdrawals $8,000." This journal entry indicates that the company has recorded $8,000 in owner's withdrawals, which have been deducted from the Owner's Capital account.
Final Answer
- Goods in transit are included in a purchaser's inventory at any time during transit. - No journal entry is required for goods in transit. - Debit Income Summary $62,000; credit Expenses $62,000. - Debit Owner's, Capital $8,000, credit Owner's, Withdrawals $8,000.
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