Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

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

Question 3

On March 15, Monroe Sales sells $9,525.00 on account to Garrison Brewer with terms of 2/10, n/30. The cost of merchandise sold was $6,905.00.
a) Journalize the sale and the recognition of the cost of the sale.
b) On March 20, a $125.00 credit memo is given to Garrison Brewer due to merchandise that was the wrong color. Journalize this event. The cost of the returned merchandise was $65.00.
c) On March 25, Garrison Brewer submits payment in full. Journalize this event.

Accepted Answer

The answer of On March 15, Monroe Sales sells $9,525.00...

Question 4

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. 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.

Accepted Answer

The answer of Sampson Co. sold merchandise to Batson Co....

Question 5

Gadget Palace is a retailer selling unique hardware. Gadget Palace uses a perpetual inventory system. Journalize the following transactions:
On July 5, Gadget Palace purchases inventory for sale from Turbo Tools for $11,400.00 with terms 2/10, n/30.
On July 6, Gadget Palace pays Fast Truck Transport $75.00 for freight-in on the July 5 order.
On July 8, Gadget Palace receives a credit memo from Turbo Tools for $215.00 for damaged merchandise.
On July 15, Gadget Palace pays Turbo Tools the balance due.

Accepted Answer

The answer of Gadget Palace is a retailer selling unique...

Question 6

Using the following information, what is the amount of gross profit?

Accepted Answer

A)  $25,300 
B)  $31,670 
C)  $30,600 
D)  $62,840 
A)  $25,300 
B)  $31,670 
C)  $30,600 
D)  $62,840

Question 7

Details of a purchase invoice and related credit memo are summarized as follows:   Assume that the credit memo was received prior to payment and that the invoice is paid within the discount period. Determine the following:
a) Amount of the cash discount allowed.
b) Amount to be paid by the purchaser if the discount is taken.
c) Cost of the merchandise to the purchaser if the discount is not taken.

Accepted Answer

a)$50
b)$5

Question 8

In recording the cost of merchandise sold for cash, based on data available from perpetual inventory records, the journal entry is

Accepted Answer

A)  debit Cost of Merchandise Sold; credit Sales 
B)  debit Cost of Merchandise Sold; credit Merchandise Inventory 
C)  debit Merchandise Inventory; credit Cost of Merchandise Sold 
D)  debit Accounts Receivable; credit Merchandise Inventory 
A)  debit Cost of Merchandise Sold; credit Sales 
B)  debit Cost of Merchandise Sold; credit Merchandise Inventory 
C)  debit Merchandise Inventory; credit Cost of Merchandise Sold 
D)  debit Accounts Receivable; credit Merchandise Inventory

Question 9

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

Accepted Answer

A)  debit to Cost of Merchandise Sold 
B)  credit to Accounts Payable 
C)  credit to Merchandise Inventory 
D)  credit to Sales 
A)  debit to Cost of Merchandise Sold 
B)  credit to Accounts Payable 
C)  credit to Merchandise Inventory 
D)  credit to Sales

Question 10

The following data were extracted from the accounting records of Dana Designs for the year ended March 31. $$\begin{array} { | l | r | } 
\hline \text { Merchandise inventory, April } 1 & \$ 530,000 \
\hline \text { Merchandise inventory, March } 31 & 375,000 \
\hline \text { Purchases } & 270,000 \
\hline \text { Purchase returns and allowances } & 25,000 \
\hline \text { Purchase discounts } & 10,000 \
\hline \text { Sales } & 770,000 \
\hline \text { Freight-in } & 3,000 \
\hline
\end{array}$$ Prepare the gross profit and cost of merchandise sold section of the income statement for the year ended March 31, using the periodic method.

Accepted Answer

The answer of The following data were extracted from the...

Question 11

The form of the balance sheet in which assets, liabilities, and stockholders' equity are presented in a downward sequence is called the report form.

Accepted Answer

A) True 
 B)False

Question 12

Details of invoices for purchases of merchandise are as follows:   Determine the amount to be paid in full settlement of each of the invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

Accepted Answer

a)$2,800 - $200 - $26 + $45 =

Question 13

In the periodic inventory system, purchases of merchandise for resale are debited to the Purchases account.

Accepted Answer

A) True 
 B)False

Question 14

Journalize the following transactions assuming a perpetual inventory system:
May 5 Purchased merchandise from Archie Co., $6,000, terms FOB shipping point, 2/10, n/30.
Prepaid freight costs of $100 were added to the invoice.
12 Issued a debit memo to Archie Co. for $2,500 of merchandise returned from purchase on May 5.
14 Paid Archie Co. for invoice of May 5, less debit memo of May 12. $$\begin{array} { | l | l | l | l | } 
\hline \text { Date } & \text { Description } & \text { Debit } & \text { Credit } \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline
\end{array}$$

Accepted Answer

The answer of Journalize the following transactions assuming a perpetual...

Question 15

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.

Accepted Answer

Merchandise Inventor

Question 16

Freight-in is the amount paid by the company to deliver merchandise sold to a customer.

Accepted Answer

A) True 
 B)False

Question 17

A chart of accounts for a merchandising business

Accepted Answer

A)  usually is the same as the chart of accounts for a service business 
B)  usually requires more accounts than does the chart of accounts for a service business 
C)  usually is standardized by the FASB for all merchandising businesses 
D)  always uses a three-digit numbering system 
A)  usually is the same as the chart of accounts for a service business 
B)  usually requires more accounts than does the chart of accounts for a service business 
C)  usually is standardized by the FASB for all merchandising businesses 
D)  always uses a three-digit numbering system

Question 18

The following data for the current year ended June 30 are from the accounting records of Zanadu Co.:
.
.

Accepted Answer

The answer of The following data for the current year...

Question 19

Complete the following data taken from the condensed income statements for merchandising Companies X, Y, and Z.

Accepted Answer

@#IMG-DLM& 
OR Rearranged in t

Question 20

If the seller is to pay the freight costs of delivering merchandise, the delivery terms are stated as

Accepted Answer

A)  FOB shipping point 
B)  FOB destination 
C)  FOB n/30 
D)  FOB seller 
A)  FOB shipping point 
B)  FOB destination 
C)  FOB n/30 
D)  FOB seller

Exam 5: Accounting for Merchandising Businesses

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

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

Using the following information, what is the amount of gross profit?

In recording the cost of merchandise sold for cash, based on data available from perpetual inventory records, the journal entry is

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

The form of the balance sheet in which assets, liabilities, and stockholders' equity are presented in a downward sequence is called the report form.

Details of invoices for purchases of merchandise are as follows: Determine the amount to be paid in full settlement of each of the invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

In the periodic inventory system, purchases of merchandise for resale are debited to the Purchases account.

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.

Freight-in is the amount paid by the company to deliver merchandise sold to a customer.

A chart of accounts for a merchandising business

The following data for the current year ended June 30 are from the accounting records of Zanadu Co.: . .

Complete the following data taken from the condensed income statements for merchandising Companies X, Y, and Z.

If the seller is to pay the freight costs of delivering merchandise, the delivery terms are stated as

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

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