Question 1

Prepare journal entries for the following transactions for Jane's Violin Shop applying the perpetual inventory system. Omit explanations.

Accepted Answer

The answer of Prepare journal entries for the following transactions...

Question 2

A business has sales of $100,250 and a normal gross profit of 30%. The estimated cost of goods sold is:

Accepted Answer

A) $30,075. 
B) $70,175. 
C) $60,150. 
D) Cannot be determined. 
A) $30,075. 
B) $70,175. 
C) $60,150. 
D) Cannot be determined.

Question 3

Given the following accounts:
   Indicate the account(s)to be debited and credited to record the following transactions.
-Purchased merchandise with credit terms of 2/10, n/30. - Perpetual
Debit ________ & ________ Credit ________ & ________

Accepted Answer

The answer of Given the following accounts:
   Indicate...

Question 4

The ________ holds the merchandise of another business to be sold.

Accepted Answer

The answer of The ________ holds the merchandise of another...

Question 5

The inventory method that assumes the cost of the ending inventory consists of new inventory is:

Accepted Answer

A) LIFO. 
B) FIFO. 
C) weighted-average. 
D) specific invoice. 
A) LIFO. 
B) FIFO. 
C) weighted-average. 
D) specific invoice.

Question 6

Goods that are consigned to another party:

Accepted Answer

A) belong to the other party because title has passed. 
B) belong to the company that has consigned them. 
C) belong to the consignor. 
D) Both B and C are correct. 
A) belong to the other party because title has passed. 
B) belong to the company that has consigned them. 
C) belong to the consignor. 
D) Both B and C are correct.

Question 7

Under the perpetual system, the purchase of merchandise is recorded by a:

Accepted Answer

A) debit to Merchandise Inventory; credit to Accounts Payable or Cash. 
B) debit to Cost of Goods Sold; credit to Accounts Payable. 
C) debit to Purchases; credit to Accounts Payable. 
D) debit to Accounts Payable; credit to Purchases. 
A) debit to Merchandise Inventory; credit to Accounts Payable or Cash. 
B) debit to Cost of Goods Sold; credit to Accounts Payable. 
C) debit to Purchases; credit to Accounts Payable. 
D) debit to Accounts Payable; credit to Purchases.

Question 8

The specific identification method is a compromise between LIFO and FIFO.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following goods should Nassen Company include in its December 31, 200X, count?

Accepted Answer

A) Goods held on consignment for Acorn Supply 
B) Goods sold to Crishom, F.O.B. destination, and arrival date scheduled for January 5 
C) Goods that are not salable 
D) Goods in transit purchased F.O.B. destination 
A) Goods held on consignment for Acorn Supply 
B) Goods sold to Crishom, F.O.B. destination, and arrival date scheduled for January 5 
C) Goods that are not salable 
D) Goods in transit purchased F.O.B. destination

Question 10

Lois's Furniture uses a periodic inventory system. Lois sold 60 tables during August. Other data for August includes:   Ending inventory under the LIFO method is:

Accepted Answer

A) $1,200. 
B) $336. 
C) $1,130. 
D) $400. 
A) $1,200. 
B) $336. 
C) $1,130. 
D) $400.

Question 11

Given the following accounts:
   Indicate the account(s)to be debited and credited to record the following transactions.
-Purchased merchandise with credit terms of 2/10, n/30. - Periodic
Debit ________ & ________ Credit ________ & ________

Accepted Answer

The answer of Given the following accounts:
   Indicate...

Question 12

Compute the cost of ending inventory using the retail method when goods available for sale at cost are $15,000, retail is $25,000, and sales at retail equal $20,000. What will the cost ratio be? What will the ending inventory be?

Accepted Answer

A) Cost ratio 60%; ending inventory $5,000 
B) Cost ratio 75%; ending inventory $10,000 
C) Cost ratio 70%; ending inventory $12,000 
D) Cost ratio 60%; ending inventory $3,000 
A) Cost ratio 60%; ending inventory $5,000 
B) Cost ratio 75%; ending inventory $10,000 
C) Cost ratio 70%; ending inventory $12,000 
D) Cost ratio 60%; ending inventory $3,000

Question 13

Under the perpetual inventory system, which of the following accounts would not be used?

Accepted Answer

A) Sales 
B) Purchases 
C) Cost of Goods Sold 
D) Merchandise Inventory 
A) Sales 
B) Purchases 
C) Cost of Goods Sold 
D) Merchandise Inventory

Question 14

The retail inventory method can be used to estimate the amount of inventory destroyed by fire.

Accepted Answer

A) True 
 B)False

Question 15

The return of merchandise was recorded as a debit to Accounts Payable and a credit to Purchases. This error would cause:

Accepted Answer

A) the period end assets to be understated. 
B) the period end liabilities to be understated. 
C) the period's net income to be understated. 
D) None of these are correct. 
A) the period end assets to be understated. 
B) the period end liabilities to be understated. 
C) the period's net income to be understated. 
D) None of these are correct.

Question 16

The journal entry to record the return of a purchase of inventory under the periodic system includes a:

Accepted Answer

A) debit to Merchandise Inventory. 
B) credit to Purchases Returns and Allowances. 
C) credit to Merchandise Inventory. 
D) credit to Purchases. 
A) debit to Merchandise Inventory. 
B) credit to Purchases Returns and Allowances. 
C) credit to Merchandise Inventory. 
D) credit to Purchases.

Question 17

A method that uses average gross profit rate and net sales to compute inventory is:

Accepted Answer

A) the retail method. 
B) the LIFO. 
C) the weighted-average method. 
D) None of these answers are correct. 
A) the retail method. 
B) the LIFO. 
C) the weighted-average method. 
D) None of these answers are correct.

Question 18

Only periodic systems must take a physical inventory at year-end.

Accepted Answer

A) True 
 B)False

Question 19

Last year's ending inventory was overstated. This error would cause:

Accepted Answer

A) this period's net income to be overstated. 
B) this period's net income to be understated. 
C) this period's end assets to be overstated. 
D) None of these are correct. 
A) this period's net income to be overstated. 
B) this period's net income to be understated. 
C) this period's end assets to be overstated. 
D) None of these are correct.

Question 20

Possible reasons for a business estimating the value of the ending inventory should NOT include:

Accepted Answer

A) the inventory is destroyed by fire. 
B) the business uses periodic system and needs to prepare interim financial statements. 
C) the business uses perpetual system so a physical inventory is never needed. 
D) All of the above are valid reasons for estimating inventory. 
A) the inventory is destroyed by fire. 
B) the business uses periodic system and needs to prepare interim financial statements. 
C) the business uses perpetual system so a physical inventory is never needed. 
D) All of the above are valid reasons for estimating inventory.

Exam 15: Accounting for Merchandise Inventory

Prepare journal entries for the following transactions for Jane's Violin Shop applying the perpetual inventory system. Omit explanations.

A business has sales of $100,250 and a normal gross profit of 30%. The estimated cost of goods sold is:

Given the following accounts: Indicate the account(s)to be debited and credited to record the following transactions. -Purchased merchandise with credit terms of 2/10, n/30. - Perpetual Debit ________ & ________ Credit ________ & ________

The ________ holds the merchandise of another business to be sold.

The inventory method that assumes the cost of the ending inventory consists of new inventory is:

Goods that are consigned to another party:

Under the perpetual system, the purchase of merchandise is recorded by a:

The specific identification method is a compromise between LIFO and FIFO.

Which of the following goods should Nassen Company include in its December 31, 200X, count?

Lois's Furniture uses a periodic inventory system. Lois sold 60 tables during August. Other data for August includes: Ending inventory under the LIFO method is:

Given the following accounts: Indicate the account(s)to be debited and credited to record the following transactions. -Purchased merchandise with credit terms of 2/10, n/30. - Periodic Debit ________ & ________ Credit ________ & ________

Compute the cost of ending inventory using the retail method when goods available for sale at cost are $15,000, retail is $25,000, and sales at retail equal $20,000. What will the cost ratio be? What will the ending inventory be?

Under the perpetual inventory system, which of the following accounts would not be used?

The retail inventory method can be used to estimate the amount of inventory destroyed by fire.

The return of merchandise was recorded as a debit to Accounts Payable and a credit to Purchases. This error would cause:

The journal entry to record the return of a purchase of inventory under the periodic system includes a:

A method that uses average gross profit rate and net sales to compute inventory is:

Only periodic systems must take a physical inventory at year-end.

Last year's ending inventory was overstated. This error would cause:

Possible reasons for a business estimating the value of the ending inventory should NOT include:

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: The Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes: the Conclusion of the Payroll Process

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Property, Plant, Equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, Dividends, Treasury Stocks, and Retained Earnings

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters

Given the following accounts: Indicate the account(s)to be debited and credited to record the following transactions. -Purchased merchandise with credit terms of 2/10, n/30. - Perpetual Debit & Credit &

Given the following accounts: Indicate the account(s)to be debited and credited to record the following transactions. -Purchased merchandise with credit terms of 2/10, n/30. - Periodic Debit & Credit &