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Exam 5: Accounting for Merchandising Businesses

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Question 61

True/False

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Closing entries for a merchandising business are not similar to those for a service business.

A) True
B) False

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Question 62

Multiple Choice

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Under the periodic inventory system,the journal entry to record the purchase of inventory will include a debit to

A) Inventory
B) Purchases
C) Accounts Payable
D) Cost of Merchandise Purchased

E) B) and C)
F) A) and B)

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Question 63

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When merchandise purchased on account is returned under the perpetual inventory system,the buyer would debit

Using the following data taken from Hsu's Imports Inc.which uses a periodic inventory system,prepare the cost of goods sold section of the income statement for the year ended March 31. ​

The proper journal entry to record the receipt of inventory purchased on account in a periodic inventory system would be

Multiple-step income statements show

If the buyer bears the freight costs related to a purchase,the terms are said to be FOB destination.

Under the perpetual inventory system,all purchases of merchandise are debited to the account

Using the following data taken from Payton Inc.which uses a periodic inventory system,prepare the cost of goods sold section of the income statement for the year ended May 31. ​

Which of the following is not a difference between a retail business and a service business?

Calculate the gross profit for Jefferson Company based on the following:

Travis Company purchased merchandise on account from a supplier for $5,700,terms 2 / 10,net 30.Travis Company paid for the merchandise within the discount period. ​Under a perpetual inventory system,record the journal entries required for the above transactions.

When the terms of sale are FOB shipping point,the buyer pays the freight charges.

Purchased goods in transit,shipped FOB destination,should be excluded from ending inventory of the buyer.

Conquest Company uses a perpetual inventory system.Conquest purchased $1,500 of merchandise on account and payment was made within the discount period.The credit terms were 2 / 10,n / 30.Journalize Conquest's purchase and payment.

During the current year,merchandise is sold for $137,500 cash and $425,600 on account.The cost of the goods sold is $322,325.What is the amount of the gross profit?

Sellers and buyers are required to record trade discounts.

Cost of goods sold is the amount that the merchandising company pays for the merchandise it intends to sell.

If the perpetual inventory system is used,an account entitled Cost of Goods Sold is included in the general ledger.

In a perpetual inventory system,the Inventory account is only used to reflect the beginning inventory.