Exam 6: Accounting for Merchandising Operations

If a retailer makes a sale of $100 on a MasterCard,and MasterCard takes a 5 percent discount on the sale,the retailer would record Cash for $100 and Accounts Payable for $5.

Ending merchandise inventory is not included in the calculation of cost of goods available for sale.

An advantage of the single-step income statement is that it is less complex than the multistep form.

Wolf Equipment uses a perpetual inventory method.Discuss how Wolf Equipment accounts for freight-in and freight-out.

Adding together the ending merchandise inventory and cost of goods sold gives the cost of goods available for sale.

Use this information to answer the following question. If the income statement were prepared in a multistep form,operating expenses would be

Use this information to answer the following question. If the income statement were prepared in a multistep form,income from operations would be

The terms "2/10,n/30" mean that a 2 percent discount is allowed on payments made over 10 but before 30 days after the invoice date.

When a U.S.company does business with a British company and payment is in British pounds,an exchange gain or loss occurs if the exchange rate between dollars and pounds changes between the date of sale and the date of payment.

Assuming that net cost of purchases was $39,000 during the year and that ending merchandise inventory was $1,000 less than the beginning merchandise inventory of $12,500,how much was cost of goods sold?

A company would be more likely to know the amount of inventory on hand if it used the periodic inventory system rather than the perpetual inventory system.

With the periodic inventory system,cost of goods available for sale must be calculated after cost of goods sold.

If it takes Diamondback Enterprises 90 days to sell inventory,46 days to collect from the sale,and creditors' payment terms are 60 days,the financing period is

Brendan Company sold merchandise worth $1,600 on credit,terms n/15 and on the next day the customer returned merchandise worth $100,which cost $60 for Brendan Company.What is the required journal entry to record the merchandise returns under the perpetual inventory system?

An American company makes a credit purchase of goods from a company in London for 1,000 British pounds.On the date of purchase,the exchange rate was $1.65 per pound.However,on the date of payment,the rate had declined to $1.60 per pound.As a result,the American company would record

Assuming the use of the periodic inventory system,use the data below to calculate the net cost of purchases and the cost of goods available for sale for the year ended December 31,20x5.

An American company makes a credit sale of goods to a company in London for 20,000 British pounds.On the date of sale,the exchange rate was $1.60 per pound.However,on the date payment was received,the exchange rate had risen to $1.70 per pound.As a result,the American company would record

The use of major credit cards does not require sellers to establish the customer's credit.

If a U.S.company purchases goods from a British supplier for a fixed number of U.S.dollars,an exchange gain or loss would not arise for the U.S.company,even if the exchange rate has changed between the time of purchase and the time of payment.