Question 1

With respect to the income statement,

Accepted Answer

A)  contra-revenue accounts do not appear on the income statement. 
B)  sales discounts increase the amount of sales. 
C)  contra-revenue accounts increase the amount of operating expenses. 
D)  sales discounts are included in the calculation of gross profit. 
A)  contra-revenue accounts do not appear on the income statement. 
B)  sales discounts increase the amount of sales. 
C)  contra-revenue accounts increase the amount of operating expenses. 
D)  sales discounts are included in the calculation of gross profit.

Question 2

Three items are missing in each of the following columns and are identified by letter. $\begin{array}{lrr}
\text { Sales revenue } & \$(a) & \$ 840,000 \
\text { Sales returns and allowances } & 15,000 & 22,000 \
\text { Sales discounts } & 10,000 & 15,000 \
\text { Net sales } & 440,000 & \text { (d) } \
\text { Beginning inventory } & \text { (b) } & 300,000\\text { Cost of goods purchased } & 220,000 & \text { (e) } \
\text { Ending inventory } & 170,000 & 303,000 \
\text { Cost of goods sold } & 252,000 & 575,000 \
\text { Gross profit } & \text { (c) } & \text { (f) }
\end{array}$ Instructions
Calculate the missing amounts and identify them by letter.

Accepted Answer

(a) $465000 (d) $803

Question 3

The respective normal account balances of Purchases, Purchase Discounts, and Freight-In are

Accepted Answer

A)  credit, credit, debit. 
B)  debit, credit, credit. 
C)  debit, credit, debit. 
D)  debit, debit, debit. 
A)  credit, credit, debit. 
B)  debit, credit, credit. 
C)  debit, credit, debit. 
D)  debit, debit, debit.

Question 4

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

Accepted Answer

A)  Inventory account. 
B)  Purchases account. 
C)  Supplies account. 
D)  Cost of Goods Sold account. 
A)  Inventory account. 
B)  Purchases account. 
C)  Supplies account. 
D)  Cost of Goods Sold account.

Question 5

Prepare the necessary journal entries to record the following transactions, assuming Eustace Company uses a perpetual inventory system.
(a) Eustace sells $45,000 of merchandise, terms 1/10, n/30. The merchandise cost $30,000.
(b) The customer in (a) returned $4,000 of merchandise to Eustace. The merchandise returned cost $2,400.
(c) Eustace received the balance due within the discount period.

Accepted Answer

The answer of Prepare the necessary journal entries to record...

Question 6

Garth Company sold goods on account to Kyle Enterprises with terms of 2/10, n/30. The goods had a cost of $600 and a selling price of $1,100. Both Garth and Kyle use a perpetual inventory system. Record the sale on the books of Garth and the purchase on the books of Kyle.

Accepted Answer

The answer of Garth Company sold goods on account to...

Question 7

Newell Company completed the following transactions in October:   Instructions
(a) Indicate the cash received for each collection. Show your calculations.
(b) Prepare the journal entry for the
(1) Oct. 17 sale. The merchandise sold had a cost of $3,500.
(2) Oct. 23 sales return. The merchandise returned had a cost of $140.
(3) Oct. 28 collection.
Newell uses a perpetual inventory system.

Accepted Answer

(a) Oct. 8 $588 [Sales $600 - Sales disc

Question 8

During August, 2018, Baxter's Supply Store generated revenues of $60,000. The company's expenses were as follows: cost of goods sold of $36,000 and operating expenses of $4,000. The company also had rent revenue of $1,000 and a gain on the sale of a delivery truck of $2,000. Baxter's gross profit for August, 2018 is

Accepted Answer

A)  $20,000. 
B)  $21,000. 
C)  $23,000. 
D)  $24,000. 
A)  $20,000. 
B)  $21,000. 
C)  $23,000. 
D)  $24,000.

Question 9

The entry to record the receipt of payment within the discount period on a sale of $2,000 with terms of 2/10, n/30 will include a credit to

Accepted Answer

A)  Sales Discounts for $40. 
B)  Cash for $1,960. 
C)  Accounts Receivable for $2,000. 
D)  Sales Revenue for $2,000. 
A)  Sales Discounts for $40. 
B)  Cash for $1,960. 
C)  Accounts Receivable for $2,000. 
D)  Sales Revenue for $2,000.

Question 10

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?

Accepted Answer

A)  $3,675 
B)  $3,750 
C)  $3,920 d $4,000 
A)  $3,675 
B)  $3,750 
C)  $3,920 d $4,000

Question 11

Freight terms of FOB Destination means that the seller pays the freight costs.

Accepted Answer

A) True 
 B)False

Question 12

Scott Company purchased merchandise with an invoice price of $3,000 and credit terms of 1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms?

Accepted Answer

A)  20% 
B)  24% 
C)  18% 
D)  36% 
A)  20% 
B)  24% 
C)  18% 
D)  36%

Question 13

Retailers and wholesalers are both considered merchandisers.

Accepted Answer

A) True 
 B)False

Question 14

You are at a company picnic and the company president starts a conversation with you. The president says "Since we use the perpetual inventory system, there is no reason to take a physical count of our inventory." What is your response to the president's remarks?

Accepted Answer

The items reported for a merchandising c

Question 15

Company X sells $900 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Accepted Answer

A)  $630 
B)  $720 
C)  $810 
D)  $882 
A)  $630 
B)  $720 
C)  $810 
D)  $882

Question 16

All of the following items would be reported as other expenses and losses except

Accepted Answer

A)  freight-out. 
B)  casualty losses. 
C)  interest expense. 
D)  loss from employees' strikes. 
A)  freight-out. 
B)  casualty losses. 
C)  interest expense. 
D)  loss from employees' strikes.

Question 17

Argentina Company gathered the following condensed data for the year ended December 31, 2018:   Instructions
1. Prepare a single-step income statement for the year ended December 31, 2018.
2. Prepare a multiple-step income statement for the year ended December 31, 2018.

Accepted Answer

The answer of Argentina Company gathered the following condensed data...

Question 18

Dawson's Fashions sold merchandise for $40,000 cash during the month of July. Returns that month totaled $1,000. If the company's gross profit rate is 40%, Dawson's will report monthly net sales revenue and cost of goods sold of

Accepted Answer

A)  $39,000 and $23,400. 
B)  $39,000 and $24,000. 
C)  $40,000 and $23,400. 
D)  $40,000 and $24,000. 
A)  $39,000 and $23,400. 
B)  $39,000 and $24,000. 
C)  $40,000 and $23,400. 
D)  $40,000 and $24,000.

Question 19

Inventories are defined by IFRS as

Accepted Answer

A)  held-for-sale in the ordinary course of business. 
B)  in the process of production for sale in the ordinary course of business. 
C)  in the form of materials or supplies to be consumed in the production process or in the providing of services. 
D)  All of these answer choices are correct.
IFRS. 
A)  held-for-sale in the ordinary course of business. 
B)  in the process of production for sale in the ordinary course of business. 
C)  in the form of materials or supplies to be consumed in the production process or in the providing of services. 
D)  All of these answer choices are correct.
IFRS.

Question 20

Sales Returns and Allowances and Sales Discounts are both ______________ accounts and have _______________ normal balances.

Accepted Answer

contra rev

With respect to the income statement,

The respective normal account balances of Purchases, Purchase Discounts, and Freight-In are

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

Garth Company sold goods on account to Kyle Enterprises with terms of 2/10, n/30. The goods had a cost of $600 and a selling price of $1,100. Both Garth and Kyle use a perpetual inventory system. Record the sale on the books of Garth and the purchase on the books of Kyle.

The entry to record the receipt of payment within the discount period on a sale of $2,000 with terms of 2/10, n/30 will include a credit to

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?

Freight terms of FOB Destination means that the seller pays the freight costs.

Scott Company purchased merchandise with an invoice price of $3,000 and credit terms of 1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms?

Retailers and wholesalers are both considered merchandisers.

You are at a company picnic and the company president starts a conversation with you. The president says "Since we use the perpetual inventory system, there is no reason to take a physical count of our inventory." What is your response to the president's remarks?

Company X sells $900 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

All of the following items would be reported as other expenses and losses except

Argentina Company gathered the following condensed data for the year ended December 31, 2018: Instructions 1. Prepare a single-step income statement for the year ended December 31, 2018. 2. Prepare a multiple-step income statement for the year ended December 31, 2018.

Dawson's Fashions sold merchandise for $40,000 cash during the month of July. Returns that month totaled $1,000. If the company's gross profit rate is 40%, Dawson's will report monthly net sales revenue and cost of goods sold of

Inventories are defined by IFRS as

Sales Returns and Allowances and Sales Discounts are both accounts and have _ normal balances.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters

Exam 5: Accounting for Merchandising Operations

With respect to the income statement,

The respective normal account balances of Purchases, Purchase Discounts, and Freight-In are

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

Garth Company sold goods on account to Kyle Enterprises with terms of 2/10, n/30. The goods had a cost of $600 and a selling price of $1,100. Both Garth and Kyle use a perpetual inventory system. Record the sale on the books of Garth and the purchase on the books of Kyle.

The entry to record the receipt of payment within the discount period on a sale of $2,000 with terms of 2/10, n/30 will include a credit to

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?

Freight terms of FOB Destination means that the seller pays the freight costs.

Scott Company purchased merchandise with an invoice price of $3,000 and credit terms of 1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms?

Retailers and wholesalers are both considered merchandisers.

You are at a company picnic and the company president starts a conversation with you. The president says "Since we use the perpetual inventory system, there is no reason to take a physical count of our inventory." What is your response to the president's remarks?

Company X sells $900 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

All of the following items would be reported as other expenses and losses except

Argentina Company gathered the following condensed data for the year ended December 31, 2018: Instructions 1. Prepare a single-step income statement for the year ended December 31, 2018. 2. Prepare a multiple-step income statement for the year ended December 31, 2018.

Dawson's Fashions sold merchandise for $40,000 cash during the month of July. Returns that month totaled $1,000. If the company's gross profit rate is 40%, Dawson's will report monthly net sales revenue and cost of goods sold of

Inventories are defined by IFRS as

Sales Returns and Allowances and Sales Discounts are both ______________ accounts and have _______________ normal balances.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters

Sales Returns and Allowances and Sales Discounts are both accounts and have _ normal balances.