Question 1

Journalize the following transactions for both Abbott Co. (seller) and Dalton Co. (buyer). Assume both the companies use the perpetual inventory system.

Accepted Answer

The answer of Journalize the following transactions for both Abbott...

Question 2

A company, using the periodic inventory system, has merchandise inventory costing $175 on hand at the beginning of the period. During the period, merchandise costing $635 is purchased. At year-end, merchandise inventory costing $160 is on hand. The cost of merchandise sold for the year is

Accepted Answer

A)  $970 
B)  $650 
C)  $300 
D)  $620 
A)  $970 
B)  $650 
C)  $300 
D)  $620

Question 3

Which of the following accounts has a normal debit balance?

Accepted Answer

A)  Accounts Payable 
B)  Sales Returns and Allowances 
C)  Sales 
D)  Interest Revenue 
A)  Accounts Payable 
B)  Sales Returns and Allowances 
C)  Sales 
D)  Interest Revenue

Question 4

Determine the amount to be paid in full settlement of each invoice, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.
   a

Accepted Answer

The answer of Determine the amount to be paid in...

Question 5

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

Accepted Answer

A)  Sales 
B)  Accounts Receivable 
C)  Merchandise Inventory 
D)  Accounts Payable 
A)  Sales 
B)  Accounts Receivable 
C)  Merchandise Inventory 
D)  Accounts Payable

Question 6

Discounts taken by a buyer because of early payment are recorded on the seller's accounting records as

Accepted Answer

A)  Purchases discount 
B)  Sales discount 
C)  Trade discount 
D)  Early payment discount 
A)  Purchases discount 
B)  Sales discount 
C)  Trade discount 
D)  Early payment discount

Question 7

In a perpetual inventory system, when merchandise is returned to the seller, Cost of Merchandise Sold is debited as part of the transaction.

Accepted Answer

A) True 
 B)False

Question 8

Sales Returns and Allowances is a contra-revenue account.

Accepted Answer

A) True 
 B)False

Question 9

Under the periodic inventory system, the journal entry to record the cost of merchandise sold at the point of sale will include the following account

Accepted Answer

A)  No entry is made. 
B)  Cost of merchandise sold 
C)  Inventory 
D)  Purchases 
A)  No entry is made. 
B)  Cost of merchandise sold 
C)  Inventory 
D)  Purchases

Question 10

Retailers record all credit card sales as credit sales.

Accepted Answer

A) True 
 B)False

Question 11

When the seller offers a sales discount, even if borrowing has to be done, it is generally advantageous for the buyer to pay within the discount period.

Accepted Answer

A) True 
 B)False

Question 12

On March 29th, customers who owe $10,500.00 for purchases made on Sonic Sales Company submit payments of $4,250.00. Journalize this event.

Accepted Answer

The answer of On March 29th, customers who owe $10,500.00...

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Freight-in is considered a cost of purchasing inventory.

Accepted Answer

A) True 
 B)False

Question 15

The following data were extracted from the accounting records of Meridian Designs for the year ended March 31, 2014.
   Prepare the cost of merchandise sold section of the income statement for the year ended March 31, 2014, using the periodic method. Also determine gross profit.

Accepted Answer

The answer of The following data were extracted from the...

Question 16

Using the following information, what is the amount of net sales?

Accepted Answer

A)  $28,970 
B)  $63,130 
C)  $63,000 
D)  $62,090 
A)  $28,970 
B)  $63,130 
C)  $63,000 
D)  $62,090

Question 17

When the perpetual inventory system is used, the inventory sold is shown on the income statement as

Accepted Answer

A)  cost of merchandise sold 
B)  purchases 
C)  purchases returns and allowances 
D)  net purchases 
A)  cost of merchandise sold 
B)  purchases 
C)  purchases returns and allowances 
D)  net purchases

Question 18

A chart of accounts for a merchandising business

Accepted Answer

A)  usually is the same as the chart of accounts for a service business 
B)  usually requires more accounts than does the chart of accounts for a service business 
C)  usually is standardized by the FASB for all merchandising businesses 
D)  always uses a three-digit numbering system 
A)  usually is the same as the chart of accounts for a service business 
B)  usually requires more accounts than does the chart of accounts for a service business 
C)  usually is standardized by the FASB for all merchandising businesses 
D)  always uses a three-digit numbering system

Question 19

When goods are shipped FOB destination and the seller pays the freight charges, the buyer

Accepted Answer

A)  journalizes a reduction for the cost of the merchandise. 
B)  journalizes a reimbursement to the seller. 
C)  does not take a discount. 
D)  makes no journal entry for the freight. 
A)  journalizes a reduction for the cost of the merchandise. 
B)  journalizes a reimbursement to the seller. 
C)  does not take a discount. 
D)  makes no journal entry for the freight.

Question 20

Service businesses provide services for income, while a merchandising business sells merchandise.

Accepted Answer

A) True 
 B)False

Exam 6: Accounting for Merchandising Businesses

Journalize the following transactions for both Abbott Co. (seller) and Dalton Co. (buyer). Assume both the companies use the perpetual inventory system.

A company, using the periodic inventory system, has merchandise inventory costing $175 on hand at the beginning of the period. During the period, merchandise costing $635 is purchased. At year-end, merchandise inventory costing $160 is on hand. The cost of merchandise sold for the year is

Which of the following accounts has a normal debit balance?

Determine the amount to be paid in full settlement of each invoice, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period. a

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

Discounts taken by a buyer because of early payment are recorded on the seller's accounting records as

In a perpetual inventory system, when merchandise is returned to the seller, Cost of Merchandise Sold is debited as part of the transaction.

Sales Returns and Allowances is a contra-revenue account.

Under the periodic inventory system, the journal entry to record the cost of merchandise sold at the point of sale will include the following account

Retailers record all credit card sales as credit sales.

When the seller offers a sales discount, even if borrowing has to be done, it is generally advantageous for the buyer to pay within the discount period.

On March 29th, customers who owe $10,500.00 for purchases made on Sonic Sales Company submit payments of $4,250.00. Journalize this event.

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

Freight-in is considered a cost of purchasing inventory.

The following data were extracted from the accounting records of Meridian Designs for the year ended March 31, 2014. Prepare the cost of merchandise sold section of the income statement for the year ended March 31, 2014, using the periodic method. Also determine gross profit.

Using the following information, what is the amount of net sales?

When the perpetual inventory system is used, the inventory sold is shown on the income statement as

A chart of accounts for a merchandising business

When goods are shipped FOB destination and the seller pays the freight charges, the buyer

Service businesses provide services for income, while a merchandising business sells merchandise.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Filters