Exam 5: Accounting for Merchandising Operations

Moses Company sells merchandise on account for $2,000 to Lane Company with credit terms of 2/10, n/30. Lane Company returns $300 of merchandise that was damaged, along with a check to settle the account within the discount period. What entry does Moses Company make upon receipt of the check?

Net purchases plus freight-in determines

Gould Shoe Store has a beginning merchandise inventory of $30,000. During the period, purchases were $140,000; purchase returns, $4,000; and freight-in $10,000. A physical count of inventory at the end of the period revealed that $20,000 was still on hand. The cost of goods available for sale was

Sales minus operating expenses equals gross profit.

In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting

Slater Brothers Supply uses a periodic inventory system. During May, the following transactions and events occurred. May 13 Purchased 6 motors at a cost of $44 each from Nen Company, terms 1/10, n/30. The motors cost Nen Company $25 each. May 16 Returned 1 defective motor to Nen. May 23 Paid Nen Company in full. Instructions Journalize the May transactions for Slater Brothers. You may omit explanations.

Gross profit represents the merchandising profit of a company.

The adjusted trial balance of Kasten Company contained the following information: Instructions 1. Use the above information to prepare a multiple-step income statement for the year ended December 31, 2010. 2. Prepare a single-step income statement for the year ended December 31, 2010.

Cole Company has sales revenue of $39,000, cost of goods sold of $24,000 and operating expenses of $9,000 for the year ended December 31. Cole's gross profit is

When goods are returned that relate to a prior cash sale,

A company's unadjusted balance in Merchandise Inventory will usually not agree with the actual amount of inventory on hand at year-end.

Hoyle Company gathered the following condensed data for the year ended December 31, 2010: Instructions 1. Prepare a single-step income statement for the year ended December 31, 2010. 2. Prepare a multiple-step income statement for the year ended December 31, 2010.

Net sales is sales less

In the Clark Company, sales were $480,000, sales returns and allowances were $30,000, and cost of goods sold was $288,000. The gross profit rate was

The following information is available for Norton Company: Norton's cost of goods sold is

An inexperienced accountant for Leyland Company made the following errors in recording merchandising transactions. 1. A $225 refund to a customer for faulty merchandise was debited to Sales $225 and credited to Cash $225. 2. A $280 credit purchase of supplies was debited to Merchandise Inventory $280 and credited to Cash $280. 3. A $160 sales return was debited to Sales. 4. A cash payment of $30 for freight on merchandise purchases was debited to Freight-out $300 and credited to Cash $300. Instructions Prepare separate correcting entries for each error, assuming that the incorrect entry is not reversed. (Omit explanations.)

Logan Company made a purchase of merchandise on credit from Claude Corporation on August 3, for $6,000, terms 2/10, n/45. On August 10, Logan makes the appropriate payment to Claude. The entry on August 10 for Logan Company is

Prepare the necessary journal entries to record the following transactions, assuming Hewitt Company uses a perpetual inventory system. (a) Purchased $30,000 of merchandise on account, terms 2/10, n/30. (b) Returned $500 of damaged merchandise for credit. (c) Paid for the merchandise purchased within 10 days.

The operating cycle of a merchandiser is

During 2010, Yoder Enterprises generated revenues of $60,000. The company's expenses were as follows: cost of goods sold of $30,000, operating expenses of $12,000 and a loss on the sale of equipment of $2,000. Yoder's net income is