Exam 4: Accounting for Merchandising Businesses

Purchases of merchandise increase the merchandise inventory account under the perpetual inventory system.

Where are selling and administrative expenses found on the multi-step income statement?

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

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a:

The document issued by the seller that informs the buyer of the details of sales returns is called a debit memorandum.

On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues.

Orange Co. sells merchandise on credit to Zea Co. in the amount of $9,000. The invoice is dated on September 15 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?

Cash paid to purchase long-term investments would be reported in the statement of cash flows in:

The following data for the current year ended December 31, 2013, were extracted from the accounting records of Gilbert Co.:

Which of the following is not a subsection in a multiple-step income statement?

Which of the following accounts will not be found in the Cost of Merchandise Sold section on the income statement?

Sales to customers who use bank credit cards, such as MasterCard and VISA, are generally treated as credit sales.

Under the indirect method for preparing the statement of cash flows, decreases in current assets are _____ net income in the cash flows from operating activities section.

State the section(s) of the statement of cash flows prepared by the indirect method (operating activities, investing activities, financing activities, or not reported) and the amount that would be reported for each of the following transactions: (a)Received $\$ 145,000$ from the sale of land costing $\$ 70,000$ . (b)Purchased investmeni sor $\$ 50,000$ . (c)Declared $\$ 35,000$ cash dividends on stock $\$ 5,000$ dividends were payable at the begining of the year, and $\$ 6,000$ were payable at the end of the year. (d)Acquired equipment for $\$ 32,000$ cash (e)Dedare d and issued 100 shares of $\$ 20$ par common stock as a stock dividend, when the market price of the stock was $\$ 32$ a share. (f)Recognized by an adjusting entry depreciation for the year, $\$ 48,000$ . (g)Issued 85,000 shares of $\$ 10$ par common stock for $\$ 25$ a share, receiving cash. (h)Issued $\$ 500,000$ of 20 -year, $10 \%$ bonds payable at 99 . (i)Borrowe $\$ \$ 43,000$ from Busey $N$ ational Bank, issung a s-year; $8 \%$ note for that amount.

If payment is due by the end of the month in which the sale is made, the invoice terms are expressed as n/eom.

If merchandise costing $2,500, terms FOB destination, 2/10, n/30, with prepaid transportation costs of $100, is paid within 10 days, the amount of the purchases discount is $48.

Based on the following data, determine the cost of merchandise sold for October. 98,560 Merchandise Inventory, October 1 102,330 Merchandise Inventory, October 31 433,880 Purchases 12,760 Purchases Returns \& Allowances 9,900 Purchases Discounts 7,620 Transportation In

Using a perpetual inventory system, the purchase of $30,000 of merchandise on account would include a(n):

If merchandise costing $2,500, terms FOB destination, 2/10, n/30, with transportation costs of $100, is paid within 10 days, the amount of the purchases discount is $52.

When merchandise that was sold on account is returned, which accounts are affected?