Ruby Gems Purchases Inventory from Diamond Mining

question 16

Multiple Choice

Ruby Gems purchases inventory from Diamond Mining.On 3 September,they received a credit note from Diamond Mining as they had been charged $3.85 rather than $3.58 for each of the 100 items purchased.What entry will Diamond Mining make? Ignore GST.

• A)Accounts payable-Ruby Gems 27 Inventory 27
• B)Inventory 27 Accounts payable-Ruby Gems 27
• C)Sales returns and allowances 27 Accounts receivable-Ruby Gems 27
• D)Sales returns and allowances 27 Inventory 27

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Definitions:

Straight-Line Method

A depreciation method where an asset's cost is evenly spread across its useful life, resulting in equal depreciation expenses each period.

Accumulated Depreciation

This represents the total amount of depreciation expense that has been charged against a fixed asset since it was put into use.

Salvage Value

The approximate salvage worth of an asset at its lifespan's conclusion.

Freight Charges

Freight charges are the costs incurred by a company for transporting goods, merchandise, or commodities from one place to another.