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Exam 6: Accounting for Merchandising Businesses

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Question 91

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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.

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Question 92

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Which of the following accounts should be closed to Income Summary at the end of the fiscal year?

A) Merchandise Inventory
B) Accumulated Depreciation
C) Drawing
D) Cost of Merchandise Sold

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

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Question 93

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In many retail businesses, inventory is the largest current asset.

There is no difference between the recording of cash sales and the recording of MasterCard or VISA sales.

On March 4th, Micro Sales makes $4,850.00 in sales on bank credit cards which charge a 2.5% service charge and deposit the funds into Micro Sales bank accounts at the end of the business day. Journalize the sales and recognition of expense.

The accounts Purchases, Purchases Returns and Allowances, Purchases Discounts, and Freight In are found on the balance sheet.

When companies use a perpetual inventory system, the recording of the purchase of inventory will include a debit to purchases.

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

The following data for the current year ended June 30 were extracted from the accounting records of Excel Co.: Prepare a multiple-step income statement for the year ended June 30, 2014.

Sales Discounts is a revenue account with a credit balance.

Bargain Wholesalers sells pet supplies to retailers including Pet World Supplies. Bargain Wholesalers uses perpetual inventory. Use a General Journal to journalize the following three transactions during the month of May:

Sampson Co. sold merchandise to Batson Co. on account, $46,000, terms 2/15, net 45. The cost of the merchandise sold is $38,500. Sampson Co. issued a credit memo for $1,500 for merchandise returned that originally cost $950. The Batson Co. paid the invoice within the discount period. Prepare the entries that both Sampson and Batson Companies would record for the above. Assume both Sampson and Batson use a perpetual inventory system.

The following data were extracted from the accounting records of Meridian Designs for the year ended March 31, 2014. Prepare the cost of merchandise sold section of the income statement for the year ended March 31, 2014, using the periodic method. Also determine gross profit.

In credit terms of 3/15, n/45, the "3" represents the

Merchandise with a sales price of $6,000 is sold on account with term 2/10, n/30. The journal entry to record the sale would include a

Merchandise inventory is classified on the balance sheet as a

Merchandise with an invoice price of $3,000 is purchased on September 2 subject to terms of 2/10, n/30, FOB destination. Freight costs paid by the seller totaled $200. What is the cost of the merchandise if paid on September 12, assuming the discount is taken?

The service fee that credit card companies charge retailers varies and is the primary reason why some businesses do accept all credit cards.

Anthony Company sold Madison Company merchandise on account FOB shipping point, 2/10, net 30, for $10,000. Anthony prepaid the $300 shipping charge. Which of the following entries does Anthony make to record this sale?

Merchandise with a list price of $4,200 and costing $2,300 is sold on account, subject to the following terms: FOB destination, 2/10, n/30. The seller prepays the freight costs of $85 (debit Freight Out for the freight costs). Prior to payment for the goods, the seller issues a credit memo for $750 to the customer for merchandise costing $425 that is returned. The correct amount is received within the discount period. The company uses a perpetual inventory system. Record the foregoing transactions of the seller in the sequence indicated below.