Exam 5: Accounting for Merchandising Businesses

Journalize the following transactions for the Evans Company.Assume the company uses a perpetual inventory system. a Sold merchandise for $645.The cost of merchandise sold was $375. b Sold merchandise for $432 and accepted VISA as the form of payment.The cost of merchandise sold was $195. c Sold merchandise on account for $670.The cost of merchandise sold was $438. d Paid credit card fees for the month of $85.

The amount of the total cash paid to the seller for merchandise purchased for consumption would normally include

A chart of accounts for a merchandising business

Prepare a single-step income statement from the following data for Burt Co.,taken from the ledger after adjustments on December 31,the end of the fiscal year.

Which of the following accounts usually has a debit balance?

Purchased goods in transit should be included in the ending inventory of the buyer if the goods were shipped FOB shipping point.

If the buyer bears the freight costs related to a purchase,the terms are said to be FOB destination.

A buyer who acquires merchandise under credit terms of 1/10,n/30 has 30 days after the invoice date to take advantage of the sales discount.

Dollar Co.sold merchandise to Pound Co.on account,$25,500,terms 2/15,net 45.The Pound Co.paid the invoice within the discount period.What is the sales amount to be recorded in the above transactions?

Under the periodic inventory system,the journal entry to record the purchase of merchandise inventory will include a debit to

The Corbit Corp.sold merchandise for $10,000 cash.The cost of the merchandise sold was $7,590.The journal entries to record this transaction under the perpetual inventory system would be

On March 5,Blowout Sales makes $22,500 in sales on the company's own credit cards.The cost of merchandise sold is $16,825.Journalize the sales and recognition of the cost of merchandise sold.

Abbey Co.sold merchandise to Gomez Co.on account,$35,000,terms 2/15,net 45.The cost of the merchandise 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?

In a merchandising business,sales minus operating expenses equals net income.

Which of the following accounts will not be found in the Cost of Merchandise Sold section of the income statement for a company using the periodic inventory method?

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

If the perpetual inventory system is used,an account entitled Cost of Merchandise Sold is included in the general ledger.

Most companies will not take a purchase discount,because 1% or 2% discounts are insignificant.

Where are selling and administrative expenses found on the multiple-step income statement?

Taking advantage of a 2/10,n/30 purchases discount is equal to a yearly savings rate of approximately