Answered: The amount recorded for net cost of…

The amount recorded for net cost of purchases includes all of the following EXCEPT: Purchase discounts. Freight costs paid by the seller. Returns and allowances. Freight costs paid by the buyer.

College Accounting (Book Only): A Career Approach

13th Edition

ISBN:9781337280570

Author:Scott, Cathy J.

Publisher:Scott, Cathy J.

Chapter9: Sales And Purchases

Section: Chapter Questions

Problem 6DQ

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Concept explainers

Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

Question

The amount recorded for net cost of purchases includes all of the
following EXCEPT:
Purchase discounts.
Freight costs paid by the seller.
Returns and allowances.
Freight costs paid by the buyer.

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Step 1: Purchase:

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Step 2: The cost not to be included in the net cost of purchases:

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Step 3: Explanation for the incorrect options:

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Similar questions

Under the retail inventory method, freight-in would be included in the calculation of the goods available for sale for which of the following?
The difference between merchandise available for sale and the end-of-period merchandise inventory is called (a) gross profit. (b) net purchases. (c) net sales. (d) cost of goods sold.
Which of the following accounts are used when recording the sales entry of a sale on credit? A. merchandise inventory, cash B. accounts receivable, merchandise inventory C. accounts receivable, sales D. sales, cost of goods sold
Which of the following accounts are used when recording a purchase using a periodic inventory system? A. cash, purchases B. accounts payable, sales C. accounts payable, accounts receivable D. cash, merchandise inventory
In the income statement, Freight-In is (a) added to purchases. (b) subtracted from purchases. (c) added to sales. (d) subtracted from cost of goods.
Identify each of the following items relating to sections of an income statement as Revenue from Sales (S), Cost of Goods Sold (CGS), Selling Expenses (SE), General Expenses (GE), Other Income (OI), or Other Expenses (OE). a. Utilities Expense b. Advertising Expense c. Purchases Discounts d. Sales Returns and Allowances e. Interest Income f. Freight In g. Depreciation Expense, Equipment h. Interest Expense i. Rent Expense j. Sales
At what amount are purchases recorded under the net-price method?
For each of the following accounts, identify whether the normal balance is a debit or a credit. Also specify whether the account is a contra account. a. Sales Returns and Allowances b. Merchandise Inventory c. Sales d. d Freight In e. Purchases Returns and Allowances f. Sales Tax Payable g. Purchases
Which of the following is an example of a contra revenue account? A. sales B. merchandise inventory C. sales discounts D. accounts payable
Identify items missing in determining cost of goods sold For (a) through (e), identify the items designated by X and Y. A. Purchases (X + Y) = Net purchases B. Net purchases + X = Cost of inventory purchased C. Inventory (beginning) + Cost of inventory purchased = X D. Inventory available for sale X = Cost of inventory before estimated returns E. Cost of goods sold before estimated returns X = Cost of goods sold
What is the normal balance for each of the following accounts: (a) Purchases? (b) Sales Discounts? (c) Purchases Returns and Allowances? (d) Sales? (e) Purchases Discounts? (f) Sales Returns and Allowances?
Which of the following is true about the Sales Returns and Allowances account? a. It is used to record the sale of merchandise. b. It is used to record the reduction of inventory. c. It is a contra account, deducted from sales. d. It is used to record discounts for prompt payment. e. None of the above.