7 Instructions: Answer all questions. 8 60 61 1. A retail furniture store buys sofas from a manufacturer for resale to customers. The manufacturer's 62 list price for a sofa is $500. The manufacturer offers a 30% trade discount. The manufacturer's 63 shipping terms are FOB destination. The shipping cost is $50. What is the net cost to the retailer? 64 65 66 The following seven questions (2 through 8) relate to a merchandising company using a perpetual 67 inventory system. Prepare the journal entries OMITTING EXPLANATIONS. 68 69 2. July 6 Purchased $1,800 of merchandise on credit with terms of net 30 days. 70 71 3. July 8. Returned $300 of the items purchased on July 6. 72 73 4. July 9 Paid freight charges of $90 on the items purchased July 6. 74 75 5. July 19 Sold merchandise on credit for $3,400, on terms of net 30 days. The merchandise 76 had a cost in inventory of $600. 77 78 6. July 22 Of the merchandise sold on July 19, $200 of it was returned. The items had cost the 79 the store $30. 80 81 7. July 28 Received payment in full from the customer of July 19. 82 83 8. July 31 Paid for the merchandise purchased on July 6. 85 86 During December our company sold 900 units of product Y. Its beginning inventory and purchases during the month were as follows: 87 9 88 89 90 91 92 93 December 1 December 5 December 10 December 15 December 20 December 20 Beginning Inventory Purchases Purchases Purchases Purchases Purchases Units 200 200 200 200 200 200 Cost $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 94 95 96 97 98 99 100 101 102 103 104 105 106 107 Calculate the value of the ending inventory under each of three methods: (a) Average Cost (b LIFO (C) FIFO Hint: since you don't know when the units were sold you cannot use the perpetual method. Use the periodic method