Exam 5: Accounting for Merchandising Operations

The adjusted trial balance of Bennett Company contained the following information: Debit Credit Sales Revenue \ 530,000 Sales Returns and Allowances \ 12,000 Sales Discounts 7,000 Cost of Goods Sold 318,000 Freight-Out 2,000 Advertising Expense 15,000 Interest Expense 13,000 Salaries and Wages Expense 90,000 Utilities Expense 23,000 Depreciation Expense 12,000 nterest Revenue 37,000 Instructions 1. Use the above information to prepare a multiple-step income statement for the year ended December 31 2016. 2. Prepare a single-step income statement for the year ended December 31 2016.

During 2016 Wu Han Co. generated revenues of $95000. The company's expenses were as follows: cost of goods sold of $47000 operating expenses of $16000 and a loss on the sale of equipment of $5000. Wu Han's net income is

Cost of goods sold is deducted from net sales revenue for the period in order to arrive at ________________.

A sales discount does not

The Sales Returns and Allowances account does not provide information to management about

On September 1 Reid Supply had an inventory of 15 backpacks at a cost of $20 each. The company uses a perpetual inventory system. During September the following transactions and events occurred. Sept. 4 Purchased 70 backpacks at $20 each from Hunter terms 2/10 n/30. Sept. 6 Received credit of $100 for the return of 5 backpacks purchased on Sept. 4 that were defective. Sept. 9 Sold 40 backpacks for $35 each to Oliver Books terms 2/10 n/30. Sept. 13 Sold 15 backpacks for $35 each to Heller Office Supply terms n/30. Sept. 14 Paid Hunter in full less discount. Instructions Journalize the September transactions for Reid Supply.

A multiple-step income statement provides users with more information about a company's income performance.

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

Inventory is classified as a current asset in a classified balance sheet.

Charlie Company uses a perpetual inventory system. During May the following transactions and events occurred. May 13 Sold 8 motors at a cost of $45 each to Scruffy Brothers Supply Company terms 4/10 n/30. The motors cost Charlie $26 each. May 16 One defective motor was returned to Charlie. May 23 Received payment in full from Scruffy Brothers. Round to nearest dollar. Instructions Journalize the May transactions for Charlie Company (seller) assuming that Charlie uses a perpetual inventory system. You may omit explanations. Round amounts to nearest dollar.

Randolf Company purchased merchandise with an invoice price of $3000 and credit terms of 3/10 n/30. Assuming a 360 day year what is the implied annual interest rate inherent in the credit terms?

The journal entry to record a credit sale is

The sales revenue section of an income statement for a retailer would not include

Python Company sells merchandise on account for $5000 to Monte Company with credit terms of 2/10 n/30. Monte Company returns $1500 of merchandise that was damaged along with a check to settle the account within the discount period. What is the amount of the check?

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

Holmes Corporation manufactures electronic components for use in many consumer products. Their raw materials are purchased literally from all over the world. Depending on the country involved purchase terms vary widely. Some suppliers for example require full prepayment while others are content to receive payment within six months of receipt of the goods. Because of this situation Holmes never closes its books until at least ten days after month end. In this way it can sort out ownership of goods in transit and document which goods were received by month end and which were not. Manya Andre a new accountant was asked to record about $70000 in inventory as having been received before month end. She argued that the shipping documents clearly showed that the goods were actually received on the 8th of the current month. Her boss busy with month-end reports curtly tells Ann to check the shipping terms. She did so and found the notation "FOB shipper's dock" on the document. She hadn't seen that particular notation before but she reasoned that if the selling company considered it shipped when it reached their dock Holmes should consider it received when it reached Holmes's dock. She did not record the purchase until after month end. Required: 1. Why are accountants concerned with the timing in the recording of purchases? 2. Was there a violation of ethical standards here? Explain.

Mantle Company's accounting records show the following at the year ending on December 31 2016: Purchase Discounts \ 16,500 Freight - In 22,100 Purchases 413,000 Beginning Inventory 47,000 Ending Inventory 57,600 Purchase Returns 15,600 Using the periodic system the cost of goods sold is

Gross profit does not appear

Brahma Supply Company uses a periodic inventory system. During September the following transactions and events occurred. Sept. 3 Purchased 70 backpacks at $50 each from South Slope Company terms 2/10 n/30. Sept. 6 Received credit of $300 for the return of 6 backpacks purchased on Sept. 3 that were defective. Sept. 9 Sold 15 backpacks for $84 each to Outdoor Sports terms 2/10 n/30. Sept. 13 Paid South Slope Company in full. Instructions Journalize the September transactions for Brahma Supply Company.