Exam 6: Accounting for Merchandising Businesses

Journalize the following transactions for the Evans Company. Assume the company uses a perpetual inventory system.

Journalize the entries to record the following selected transactions:

Details of invoices for purchases of merchandise are as follows: Determine the amount to be paid in full settlement of each of the invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

Which of the following accounts has a normal debit balance?

Cleary Company had total Sales of $550,000; Sales Discounts of $10,000; Sales Returns of $40,000 and Cost of Merchandise Sold of $200,000 during 2010. The total asset balance at the beginning of the year was $175,000 and at the end of the year was $167,000. Calculate the ratio of net sales to total assets (Round answer to 2 decimal points).

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

When a large quantity of merchandise is purchased, a reduction allowed on the sale price is called a trade discount.

Record the following transactions for Sparky's Pet Shop using the general journal form provided below. Assume Sparky's uses a perpetual inventory system. Omit transaction descriptions from entries:

When purchases of merchandise are made for cash, the transaction may be recorded with the following entry

When merchandise is returned under the perpetual inventory system, the buyer would credit

In recording the cost of merchandise sold for cash, based on data available from perpetual inventory records, the journal entry is

A retailer purchases merchandise with a catalog list price of $30,000. The retailer receives a 15% trade discount and credit terms of 2/10, n/30. How much cash will be needed to pay this invoice within the discount period?

Closing entries for a merchandising business are similar to those for a service business.

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are

The ratio of net sales to assets measures how effectively a business is using its assets to generate sales.

When a buyer returns merchandise purchased for cash, the buyer may record the transaction using the following entry

Which of the following accounts has a normal credit balance?

The arrangements between buyer and seller as to when payments for merchandise are to be made are called

Based upon the following data, determine the cost of merchandise sold for August.

When merchandise is sold for $600 plus 6% sales tax, the Sales account should be credited for $636.