Exam 5: Merchandising Operations

A company that uses the perpetual inventory method purchases inventory for $2,000 from a vendor on account,FOB shipping point,with terms of 2/10,n/30.The company paid the shipper $100 cash for freight in. -The company paid the vendor 9 days after the sale.Assuming this was the only transaction affecting inventory,and that there was no beginning balance,what would the cost basis of the inventory be?

Credit terms of 2/10,n/30 mean that the purchaser may deduct 2 percent if the invoice is paid within 10 days,with the full amount due in 30 days if the early payment option is NOT exercised.

Freight in should be added to the inventory account if the company uses the perpetual inventory method.

FOB Destination means that the:

An adjusted trial balance is shown below. Debit Credit Cash \ 12,600 Accounts receivable 2,400 Prepaid rent 800 Inventory 28,000 Accounts payable \ 4,200 Salary payable 1,000 Notes payable 800 Capital 13,800 Drawing 1,000 Sales revenue 96,000 Sales returns and allowances 1,600 Sales discounts 400 Cost of goods sold 25,000 Salary expense 21,000 Rent expens 14,000 Depreciation expense 8,500 Supplies expense 500 Total \ 115,800 \ 115,800 - Please provide the third closing entry.

Avery Supplies uses a periodic inventory system.Please refer to the following data: Beginning inventory \ 3,000 Ending inventory 2,100 Purchases 24,000 Purchase discounts 800 Purchase returns \& allowances 1,200 Freight in 4,200 -How much is Net purchases?

A sales return is recorded with a credit to Accounts receivable.

Which of the following would appear on the income statement of a company that uses the periodic inventory method,but would NOT appear on the income statement of a company that uses the perpetual inventory method?

A sales allowance is recorded with a debit to Inventory.

Reid Art Supply Company uses a perpetual inventory system.The company had the following transactions during August,2012: Aug.5 Reid Company purchased $2,900 of merchandise on account.Freight and credit terms were FOB shipping point,3/15,n/60. Aug.9 Reid Company paid transportation costs of $440 for the Aug.5 purchase. Aug.10 Reid Company returned $600 of defective merchandise that had been purchased on Aug.5. Aug.15 Reid Company paid for the merchandise purchased on Aug.5. - Please provide the journal entry on Aug.10.

Operating income is Gross profit minus Operating expenses.

Reid Art Supply Company uses a perpetual inventory system.The company had the following transactions during August,2012: Aug.5 Reid Company purchased $2,900 of merchandise on account.Freight and credit terms were FOB shipping point,3/15,n/60. Aug.9 Reid Company paid transportation costs of $440 for the Aug.5 purchase. Aug.10 Reid Company returned $600 of defective merchandise that had been purchased on Aug.5. Aug.15 Reid Company paid for the merchandise purchased on Aug.5. - Please provide the journal entry on Aug.15.

Which of the following defines Net sales revnue?

Under a perpetual inventory system,which of the following would NOT be required?

Freight out is an addition to the Inventory account if the company uses the perpetual inventory method.

In a perpetual inventory system,the entry to record the inventory purchased includes a credit to Cost of goods sold.

Net sales revenue is equal to Sales revenue less Cost of goods sold.

Inventory is the:

A company's ledger shows an Inventory balance of $20,000 and a physical count of the inventory shows $19,000.Please provide the adjusting entry needed to record the shrinkage.

A small increase in the gross profit percentage could indicate: