Exam 5: Accounting for Retail Businesses

Assume that the total inventory on hand at the end of the year as determined by taking a physical inventory is $63,000. Excluded from the count were purchases of $6,000 in transit under FOB shipping point terms. What is the cost of inventory reported on the balance sheet?

Using the following data taken from Hsu's Imports Inc. which uses a periodic inventory system, prepare the cost of goods sold section of the income statement for the year ended March 31. ​

The seller records the sales tax as part of the sales amount.

Merchandise is purchased for $6,000 on September 2 subject to terms of 2/10, n/30, FOB destination. Freight costs paid by the seller totaled $200. What is the required payment if paid on September 12?

Service businesses provide services for income, while a merchandising business sells merchandise.

Which of the following accounts carry a normal debit balance?

Merchandise subject to terms 2/10, n/30, FOB shipping point, is sold on account to a customer for $25,000. What is the amount of sales discount allowable?

During the current year, merchandise is sold for $137,500 cash and $425,600 on account. The cost of the goods sold is $322,325. What is the amount of the gross profit?

Journalize the following transactions for Armour Inc. using both the periodic inventory system and the perpetual inventory system, presented in the side-by-side format of the form provided below. Oct.7 Sold $1,200 of merchandise on credit to Rondo Distributors, terms n/30; the cost of the merchandise was $720. Oct. 8 Purchased merchandise, $10,000; terms FOB shipping point and 2/15, n/30; with prepaid freight charges of $525 added to the invoice.

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

Who is responsible for the freight costs when the terms are FOB shipping point?

The entry to record the return of merchandise from a customer would include a

The following data for the current year ended June 30 are from the accounting records of Zanadu Co.: ​ Prepare a multiple-step income statement for the year ended June 30.

The fees associated with credit card sales are periodically recorded as expenses.

On March 15, Monroe Sales sells $9,525.00 on account to Garrison Brewer with terms of 2/10, n/30. The cost of goods sold was $6,905.00. (a) Journalize the sale and the recognition of the cost of the sale. (b) On March 20, a $125.00 credit memo is given to Garrison Brewer due to merchandise that was the wrong color. Journalize this event. The cost of the returned merchandise was $65.00. (c) On March 25, Garrison Brewer submits payment in full. Journalize this event.

Inventory shrinkage is recorded when

Which of the following accounts will only be found in the chart of accounts of a merchandising company?

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

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

When merchandise that was sold is returned, a credit to Customer Refunds Payable is made.