Exam 4: Accounting for Merchandising Operations

Using the following year-end information for Bauman,LLC,calculate the current ratio and acid-test ratio: Cash \ 48,000 Short-term investrnents 12,000 Accounts receivable 45,000 Inventory 225,000 Prepaid expenses 12,500 Accounts payable 86,500 Other current payables 22,000

A company's gross profit was $83,750 and its net sales were $347,800.Its gross margin ratio equals:

Sales of $350,000 and net sales of $323,000 could reflect sales discounts of $27,000.

Expenses related to accounting,human resource management,and financial management are known as selling expenses.

Delivery expense is reported as part of general and administrative expense in the seller's income statement.

A company reported the following information for the month of July: Sales \ 50,475 Sales discounts 1,235 Sales returns and allowances 2,840 Cost of goods sold 33,975 Required: Calculate this company's gross profit.

Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases.The company purchased $9,750 of merchandise on August 7 with terms 1/10,n/30.On August 11,it returned $1,500 worth of merchandise. -On August 16,it paid the full amount due.The amount of the cash paid on August 16 equals:

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:

Match the following definitions with the appropriate terms. -The expenses of promoting sales by displaying and advertising merchandise,making sales,and delivering goods to customers.

Inventory shrinkage can be computed by comparing the ________ of inventory with recorded quantities and amounts.

Cost of goods sold represents the cost of buying and preparing merchandise for sale.

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.The journal entry or entries that Vander will make on September 12 is:

The net method initially records the invoice at its net amount (net of any cash discount).

An income statement that includes cost of goods sold as another expense and shows only one subtotal for total expenses is a:

Calculate the gross margin ratio for each of the following separate cases A through C: A B C Net sales \ 145,000 \ 623,500 \ 37,800 Cost of goods sold 83,600 269,200 13,230

The following information refers to Percy's Records and its competitors in the music store business. Current Ratio Quick Ratio Percy's Records 2.0 0.95 Tewel CDs 1.5 1.00 Rudy's Raps 1.8 1.20 Marvin's Jazz 1.9 0.80 Industry Average 2.0 1.00 Required: Comment on the relative liquidity positions of these companies.

In its first year of business,Borden Corporation had sales of $2,000,000 and cost of goods sold of $1,200,000.Borden expects returns in the following year to equal 8% of sales.The adjusting entry or entries to record the expected sales returns is (are):

Describe why tracking inventory activities are necessary for a merchandising company.

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

Describe the recording process (including costs)for the types of transactions involved in purchasing merchandise inventory when a perpetual inventory system is used.