Exam 5: Accounting for Merchandising Operations

On October 1,Mutch Company sold merchandise in the amount of $5,800 to Carr Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Mutch uses the perpetual inventory system.On October 4,Carr returns some of the merchandise.The selling price of the merchandise is $500 and the cost of the merchandise returned is $350.The entry or entries that Mutch must make on October 4 is:

Distinguish between selling expenses and general and administrative expenses.

A company's net sales are $775,420,its costs of goods sold are $413,890,and its net income is $117,220.Its gross margin ratio equals:

The gross margin ratio is defined as gross margin divided by net sales.

Cost of Goods Sold is debited to close the account during the closing process.

Identify and explain the key components of income for a merchandising company.

The gross margin ratio equals net sales less ___________ divided by net sales.

Brig Company had $800,000 in sales,sales discounts of $12,000,sales returns and allowances of $18,000,cost of goods sold of $380,000,and $275,000 in operating expenses.Net income equals:

Beginning merchandise inventory plus the net cost of purchases is the merchandise available for sale.