Kramer, Inc

question 225

Multiple Choice

Kramer, Inc. uses a periodic inventory system. Kramer purchased $1,000 of merchandise on credit, with terms 1/10, n/30, FOB shipping point. The shipping cost of $150 was paid upon receipt of the goods. The journal entry to record the shipping cost includes a credit to Cash and a debit to:

• A)Freight Expense
• B)Merchandise Inventory
• C)Purchases
• D)Transportation-In
• E)Accounts Payable

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Definitions:

Job Order Costing System

A method of assigning production costs to individual units or projects based on the specific materials and labor they require.

Job Order Costing System

An accounting method used to assign product costs based on specific customer orders, tracking costs for each job separately.

Cost Accounting Systems

Methods and procedures used to measure, record, and report product costs.

Process Cost

A method of costing that is used to determine the cost of producing products in continuous processes or operations.