Exam 5: Merchandising Operations

A retailer sells,for cash,a television set with a two-year service contract.The retailer initially records the cash received for the service contract as Unearned Revenue.

A merchandiser,following the perpetual inventory system,has the following transactions during August,2019: Date Trarsaction Amount Aug. 5 Purchased irventory on account \ 300,000 Aug. 9 Paid for transportation of goods purchased 25,000 Aug. 10 Returned defective merchandise to the seller 20,000 Aug. 15 Paid for goods purchased on August 5 ? Credit terms of invoice are 2/15,n/45.Prepare journal entries for the above transactions.Omit explanations.

Freight charges to ship goods to customers is recorded as a debit to Delivery Expense.

Under the perpetual inventory system,two journal entries are used to record the sale of merchandise.One entry records the Sales Revenue and another entry records the Cost of Goods Sold.

The entry to close Sales Revenue includes a debit to Income Summary.

When using a periodic inventory system,the Merchandise Inventory account will never be used when recording purchases,purchase discounts,purchase returns,or sales of inventory.

The entry to record inventory shrinkage includes a debit to the Merchandise Inventory account.Assume a perpetual inventory system is used.

The largest expense of a merchandiser is usually ________.

Operating expenses include ________.

Net sales revenue is sales revenue less sales discounts and estimated sales returns and allowances.

A company that uses the perpetual inventory system purchased inventory for $1,080,000 on account with terms of 4/7,n/20.Which of the following correctly records the payment made 15 days after the date of invoice?

A retailer can buy merchandise either from a manufacturer or a wholesaler.

Journalize the following transaction for a merchandiser that uses the perpetual inventory system. Sold goods for cash,$1,200 (cost $750).Omit explanations.

On March 18,James Smith purchased $5,000 of furniture from Home Furnishings on account.The cost of the goods was $3,000.On March 20,Home Furnishings granted the customer a $400 sales allowance for goods damaged in transit.Which of the following represents the correct way to record this transaction?

An adjusted trial balance for a merchandiser is given below. Debit Credit Cash \ 12,600 Accounts Receivable 2,400 Prepaid Rent 800 Merchandise Inventory 30,000 Accounts Payable \ 4,200 Salaries Payable 1,000 Notes Payable 800 Brown, Capital 13,800 Brown, Withdrawals 1,000 Sales Revenue 96,000 Sales Discounts Forfeited 400 Cost of Goods Sold 23,000 Insurance Expense 2,400 Salaries Expense 21,000 Rent Expense 14,000 Selling Expense 8,500 Supplies Expense Total \ 116,200 \ 116,200 Prepare the journal entry to close the expense accounts.Omit explanation.

A customer returned merchandise purchased with cash with a sales price of $9,500.The cost of goods was $3,800.Which of the following represents the correct way to record this transaction?

Credit terms of a merchandising company are 1/15,net 40.This means that the buyer can receive a discount of 1% if the invoice is paid within 40 days of the invoice date.

An invoice of $1,000 for merchandise purchased is showing 3/15,n/30 as terms of credit.If the invoice is paid on or before the fifteenth day after the invoice date,the amount to be paid is ________.

When a periodic inventory system is used,________.

The following information relates to Blake Auto Supply. Net Sales Revenue \ 191,000 Cost of Goods Sold 150,000 Interest Revenue 12,000 Operating Expenses 40,000 Calculate the net income of Blake Auto Supply.