Exam 5: Accounting for Merchandising Businesses

Merchandise is ordered on November 10; the merchandise is shipped by the seller and the invoice is prepared, dated, and mailed by the seller on November 13; the merchandise is received by the buyer on November 18; the entry is made in the buyer's accounts on November 20. The credit period begins with what date?

Match each of the following items a-h) with the appropriate definition below. -Discount to government agencies or customers who purchase large quantities of merchandise.

What is the major difference between a periodic and perpetual inventory system?

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

Under the periodic inventory system, the cost of merchandise sold is equal to the beginning merchandise inventory plus the cost of merchandise purchased plus the ending merchandise inventory.

The retained earnings statement shows

The primary difference between the periodic and perpetual inventory systems is that a

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

Calculate the gross profit for Jefferson Company based on the following: Sales \ 764,000 Selling Expenses 42,500 Cost of Merchandise Sold 538,000

On March 25, Osgood Company sold merchandise on account, $10,000, terms n/30. The applicable sales tax percentage is 7.5%. Record the transaction. Journal Date Description Post. Ref. Debit Credit

When the three sections of a balance sheet are presented on a page in a downward sequence, it is called the

When a merchandising business is compared to a service business, the financial statement that is not affected by that change is the retained earnings statement.

The seller records the sales tax as part of the sales amount.

Based upon the following data for a business with a periodic inventory system, determine the cost of merchandise sold for August. Merchandise inventory, August 1 \ 75,560 Merchandise inventory, August 31 96,330 Purchases 373,880 Purchases returns \& allowances 14,760 Purchases discounts 10,900 Freight-in 4,135

The journal entry to record the receipt of inventory purchased for cash in a perpetual inventory system would be

Other income and expenses are items that are not related to the primary operating activity.

Purchases of merchandise are typically credited to the merchandise inventory account under the perpetual inventory system.

A retailer purchases merchandise with a catalog list price of $30,000. The retailer receives a 15% trade discount and credit terms of 2/10, n/30. How much cash will be needed to pay this invoice within the discount period?

Journalize the following merchandise transactions: a) Sold merchandise on account, $17,300, with terms 2/10, net 30. The cost of the merchandise sold was $12,600. b) Received payment within the discount period.

Purchased goods in transit should be included in the ending inventory of the buyer if the goods were shipped FOB shipping point.