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Exam 5: Accounting for Merchandising Businesses

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Question 111

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Journalize the entries to record the following selected transactions:

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Question 112

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Which of the following items would affect the cost of merchandise inventory acquired during the period?

A) quantity discounts
B) cash discounts
C) freight-in
D) all of these costs

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

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Question 113

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On March 5th, Blowout Sales makes $22,500.00 in sales on the company's own credit cards. The cost of merchandise sold are $16,825.00. Journalize the sales and recognition of the cost of merchandise sold.

Prepare a multiple-step income statement for Armour Co. from the following data for the year ended December 31, 2014. Sales, $790,000; cost of merchandise sold, $330,000; administrative expenses, $35,000; interest expense, $20,000; rent revenue, $25,000; sales returns and allowances, $35,000; selling expenses, $50,000.

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

Who pays the freight costs when the terms are FOB shipping point?

During the current year, merchandise is sold for $117,500 cash and $241,750 on account. The cost of the merchandise sold is $157,400. What is the amount of the gross profit?

When comparing a retail business to a service business, the financial statement that changes the least is the

When merchandise is returned under the perpetual inventory system, the buyer would credit

In a periodic inventory system, the cost of merchandise purchased includes the cost of freight-in.

Using the following information, what is the amount of net sales?

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are

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

Merchandise with a list price of $4,700 is purchased on account, terms FOB shipping point, 1/10, n/30. The seller prepaid freight costs of $100. Prior to payment, $1,400 of the merchandise is returned. The correct amount is paid within the discount period. Record the foregoing transactions of the buyer in the sequence indicated below, assuming a perpetual inventory system is used.

Sales to customers who use nonbank credit cards, such as American Express, are generally treated as credit sales.

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

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

Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a

Merchandise Inventory normally has a debit balance.

When a merchandising business is compared to a service business, the financial statement that is not affected by that change is the Statement of Owner's Equity.