Exam 5: Accounting for Merchandising Businesses

Which of the following items would affect the cost of merchandise inventory acquired during the period?

A sale of $750 on account,subject to a sales tax of 6%,would be recorded as an account receivable of $750.

Under the perpetual inventory system,a company purchases merchandise on terms 2/10,n/30.If payment is made within 10 days of the purchase,the entry to record the payment will include a credit to Cash and a credit to Purchase Discounts.

Net income plus operating expenses is equal to

Marshall Supplies is a janitorial supply store.Marshall Supplies uses perpetual inventory.Use a General Journal to journalize the following four transactions during the month of July:

Merchandise is ordered on December 1;the merchandise is shipped by the seller and the invoice is prepared,dated,and mailed by the seller on December 3;the merchandise is received by the buyer on December 8;the entry is made in the buyer's accounts on December 10.The credit period begins with what date?

Describe the major differences in preparing the financial statements for a service business and a merchandising business.

The inventory system employing accounting records that continuously disclose the amount of inventory is called

Isaac Co.sells merchandise on credit to Sonar Co in the amount of $5,700.The invoice is dated on April 1 with terms of 1/15,net 45.What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?

During the current year,merchandise is sold for $86,000 cash and for $93,950 on account.The cost of the merchandise sold is $76,240.What is the amount of the gross profit?

Taking advantage of a 2/10,n/30 purchases discount is equal to a savings yearly rate of approximately

The adjusting entry to record inventory shrinkage would generally include a debit to Cost of Merchandise Sold.

Ramone Company had $600,000 in Net Sales for the year 2010.The total assets at the beginning of the year were $240,000 and total assets at the end of the year were $280,000.The ratio of net sales to total assets is (round answer to 2 decimal places):

The single-step income statement is easier to prepare,but a criticism of this format is that gross profit and income from operations are readily available.

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

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

Office salaries,depreciation of office equipment,and office supplies are examples of what type of expense?

Under the periodic inventory system,the journal entry to record the purchase of merchandise inventory will include a debit to

Merchandise with a list price of $4,700 is purchased on account,terms FOB shipping point,1/10,n/30.The seller prepaid freight costs of $100.Prior to payment,$1,400 of the merchandise is returned.The correct amount is paid within the discount period. Record the foregoing transactions of the buyer in the sequence indicated below,assuming a perpetual inventory system is used.