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Exam 5: Accounting for Merchandising Businesses

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Question 101

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Journalize the following transactions assuming a perpetual inventory system: ​

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Question 102

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A sales invoice included the following information: merchandise price,$12,000; terms 1 / 10,n / eom; FOB shipping point with prepaid freight of $900 added to the invoice.Assuming that a credit for merchandise returned of $500 is granted prior to payment and that the invoice is paid within the discount period,what is the amount of cash that should be received by the seller?

A) $12,285
B) $11,500
C) $10,480
D) $11,385

E) All of the above
F) C) and D)

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Question 103

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Gross profit minus selling expenses equals net income.

Journalize the entries to record the following selected transactions:

On the income statement in the single-step form,the total of all expenses is deducted from the total of all revenues.

Pierce Company sold to Stanton Company merchandise on account FOB shipping point,2 / 10,net 30,for $20,000.Pierce prepaid the $500 shipping charge.Which of the following entries does Pierce make to record this sale?

Income that cannot be associated definitely with operations,such as a gain from the sale of a fixed asset,is listed as Other Revenue on the multiple-step income statement.

When the perpetual inventory system is used,the inventory sold is shown on the income statement as

A chart of accounts for a merchandising business

Sales to customers who use bank credit cards,such as MasterCard and VISA,are generally treated as credit sales.

In recording the cost of goods sold for cash,based on data available from perpetual inventory records,the journal entry is

A seller may grant a buyer a reduction in selling price and this is called a customer discount.

Using a perpetual inventory system,the entry to record the sale of merchandise on account includes a

A company using the periodic inventory system has the following account balances: Inventory at the beginning of the year,$3,600; Freight In,$650; Purchases,$10,700; Purchases Returns and Allowances,$1,950; Purchases Discounts,$330.The cost of merchandise purchased is equal to

Which of the following accounts will not be found in the Cost of Goods Sold section of the income statement for a company using the periodic inventory method?

On March 3,Bluebird Sales makes $4,350 in cash sales of general merchandise that has a cost of $1,512.Bluebird uses a perpetual inventory system. (a)Journalize the sale. (b)Journal the cost of goods sold.

Cumberland Co.sells $2,000 of inventory to Hancock Co.for cash.Cumberland paid $1,250 for the merchandise.Under a perpetual inventory system,which of the following journal entry(ies) would be recorded?

When goods are shipped FOB destination and the seller pays the freight charges,the buyer

Using the letter preceding each account,arrange the following selected accounts in the order they would normally appear in a chart of accounts of a company that uses a multiple-step income statement.

Complete the following data taken from the condensed income statements for merchandising Companies X,Y,and Z.