Exam 4: Accounting for Merchandising Operations

A company purchased $1,800 of merchandise on July 5 with terms 2/10,n/30.On July 7,it returned $200 worth of merchandise -On July 28,it paid the full amount due.Assuming the company uses a perpetual inventory system,and records purchases using the gross method,the correct journal entry to record the merchandise return on July 7 is:

A buyer of $5,000 in merchandise inventory does not take advantage of a supplier's credit terms of 2/10,n/30,and instead pays the invoice in full at the end of 30 days.The buyer will pay $4,900.

A merchandiser's classified balance sheet reports merchandise inventory as a current asset.

Preston Office Furniture uses the periodic inventory system and the gross method of accounting for sales.It had the following transactions during the month of May: Prepare the required journal entries that Preston Office Furniture must make to record these transactions.

A company records the following journal entry: debit Cash $1,470,debit Sales Discounts $30,and credit Accounts Receivable $1,500.This means that a customer has taken what percentage cash discount for early payment?

Sellers always offer a discount to buyers for prompt payment toward purchases made on credit.

Non-operating activities that include interest expense,losses from asset disposals,and casualty losses are reported as ________.

A company had a gross profit of $300,000 based on sales of $400,000.Its cost of goods sold equals $700,000.

A ________ income statement format shows net sales and reports subtotals for various types of items such as gross profit,income for operations,and net income.

The current period's ending inventory is:

What is gross margin ratio? How is it used as an indicator of profitability?

Merchandise that customers return to the seller after a sale is referred to as________.

Sales returns:

On September 12,Vander Company sold merchandise in the amount of $5,800 to Jepson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000. -Vander uses the periodic inventory system and the gross method of accounting for sales.On September 14,Jepson returns some of the merchandise.The selling price of the merchandise is $500 and the cost of the merchandise returned is $350.Jepson pays the invoice on September 18,and takes the appropriate discount.The journal entry that Vander makes on September 18 is:

A ________ buys products from manufacturers and sells to retailers.

On September 12,Ryan Company sold merchandise in the amount of $5,800 to Johnson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000. -Ryan uses the periodic inventory system and the net method of accounting for sales.The journal entry or entries that Ryan will make on September 12 is (are):

A company purchased $10,000 of merchandise on June 15 with terms of 3/10,n/45,and FOB shipping point.The freight charge,$500,was added to the invoice amount.On June 20,it returned $800 of that merchandise.On June 24,it paid the balance owed for the merchandise taking any discount it is entitled to.The cash paid on June 24 equals:

Under the net method,when a company uses a perpetual inventory system,an invoice for $2,000 with terms of 2/10,n/30 should be recorded with a debit to Merchandise Inventory and a credit to Accounts Payable of $2,000.

On March 12,Klein Company sold merchandise in the amount of $7,800 to Babson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,500.Klein uses the perpetual inventory system and the gross method of accounting for sales. -On March 15,Babson returns some of the merchandise.The selling price of the merchandise is $600 and the cost of the merchandise returned is $350.Babson pays the invoice on March 20,and takes the appropriate discount.The journal entry that Klein makes on March 20 is:

Johnnycake Restaurant uses a periodic inventory system and the gross method of accounting for purchases.Prepare general journal entries to record the following transactions for Johnnycake: