Exam 5: Accounting for Retail Businesses

A physical inventory taken at year end indicated that there was $125,000 on hand. The Estimated Returns Inventory is $8,200. Depreciation for the year is $24,500. On December 31, the close of the fiscal year, the balances of selected accounts appearing in the ledger of Broxton Gallery, an art retailer, are as follows: Prepare the December 31 closing entries for Broxton Gallery.

Which of the following is not a difference between a retail business and a service business?

During the current year, merchandise is sold for $86,000 cash and for $93,950 on account. The cost of the goods sold is $76,240. What is the amount of the gross profit?

Using the following data taken from Payton Inc., which uses a periodic inventory system, determine the gross profit to be reported on the income statement for the year ended May 31.​

Abbey Co. sold merchandise to Gomez Co. on account, $35,000, terms 2/15, net 45. The cost of the goods sold is $24,500. Abbey Co. issued a credit memo for $3,600 for merchandise returned that originally cost $1,700. Gomez Co. paid the invoice within the discount period. What is the amount of gross profit earned by Abbey Co. on the above transactions?

Merchandise subject to terms 2/10, n/30, FOB shipping point, is sold on account to a customer for $25,000. What is the amount of sales discount allowable?

In a perpetual inventory system, merchandise returned to vendors reduces the inventory account.

Under a periodic inventory system, closing entries will include

Merchandise is sold for $3,600, terms FOB destination, 2/10, n/30, with prepaid freight costs of $150. The sales amount recorded is $3,528.

A company using the periodic inventory system has the following account balances: Inventory at the beginning of the year, $3,600; Freight In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The cost of merchandise purchased is equal to

Bradford Company had sales of $700,000 for a year. The total assets at the beginning of the year were $240,000, and the total assets at the end of the year were $280,000. The asset turnover ratio is (round answer to 2 decimal places)

Match each of the following terms (a-h) with the correct definition below. -Inventory system that updates the inventory account only at the end of the accounting period based on a physical count of inventory on hand. A)Credit terms B)FOB destination C)FOB shipping point D)Periodic inventory system E)Perpetual inventory system F)Inventory shrinkage G)Single-step income statement H)Multiple-step income statement

Assume that the total inventory on hand at the end of the year as determined by taking a physical inventory is $62,000. Of the $62,000, $8,000 has been sold FOB destination and is awaiting pickup by the carrier. What is the cost of inventory reported on the balance sheet?

Using the following data taken from Hsu's Imports Inc. which uses a periodic inventory system, determine the gross profit to be reported on the income statement for the year ended March 31.​

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

Match each of the following items (a-h) with the appropriate definition below. -Early payment discount offered to customers by the seller. A)Freight B)Delivery Expense C)Inventory D)Sales discount E)Purchases Returns and Allowances F)Debit memo G)Purchases discount H)Trade discount

Expenses that are incurred directly or entirely in connection with the selling of merchandise are classified as

Complete the following data taken from the condensed income statements for merchandising Companies A, B, and C.

During the current year, merchandise is sold for $137,500 cash and $425,600 on account. The cost of the goods sold is $322,325. What is the amount of the gross profit?

Who is responsible for the freight costs when the terms are FOB shipping point?