Exam 3: Accounting for Merchandising Businesses

On April 16,2012,Tuxedo Company purchased $75,000 of merchandise inventory.Terms of the purchase included a discount of 3/10,n/30.Also,the freight terms were FOB destination.Freight costs amounted to $2,300.Tuxedo Company paid the account payable on April 24.Tuxedo Company sold all inventory for $93,750. Required: Determine the amount of gross margin Tuxedo Company would report on the income statement.

Cost of Goods Sold is reported

Youkilis Co.paid $800 cash for freight charges to obtain merchandise inventory from a supplier.Show how the transaction would affect Youkilis's financial statements.

A company purchased inventory on account.If the perpetual inventory method is used,which of the following choices accurately reflects how the purchase affects the company's financial statements?

During the month of March,Wang Company incurred selling and administrative expenses on account in the amount of $1,800.Which of the following represents the effects of this transaction on Wang's financial statements?

Which of the following is not a period cost?

The gross margin from these transactions of Marathon Company is

On October 1,Snyder Company made a $50,000 sale giving the customer terms of 3/10,n/30.The receivable was collected from the customer on October 8.What effect will the collection of cash from the receivable have on the company's financial statements?

The following is a partial list of account balances for Waverly Company at December 31,2012,prior to closing entries: a.After the temporary accounts are closed,what will be the balance of Retained Earnings? b.From the above information,prepare: 1.A multistep income statement. 2.A single-step income statement

Armstrong Company maintains perpetual inventory records.The company's inventory account had a $6,500 balance as of December 31,2012.On that date,a physical count of inventory showed only $6,100 of merchandise in stock.The write-down to recognize the missing inventory will

Gruver Company maintains perpetual inventory records.The company's inventory account had a $5,500 balance as of December 31,2012.On that date,a physical count of inventory showed only $5,300 of merchandise in stock.The write-down to recognize the missing inventory will

A single step income statement separates routine operating results from peripheral or non-operating items.

Maui Company uses the periodic inventory method.The company purchased an item of inventory for $90 and sold the item to a customer for $115.What effect will this sale have on the balance in the company's inventory account at the date of the sale?

Single-step income statements are more widely used in practice than multistep income statements.

Bryan Co.paid $40 for freight cost to have merchandise shipped to one of its customers.Show how the transaction would affect Bryan's financial statements.

Whitney Company's Cost of Goods Available for Sale for 2012 was $610,000.Which of the following statements is true?

The amount of gross margin from the four transactions is

The following events apply to Bob's Hobby Shop. 1.Sold merchandise to a customer.The goods were shipped FOB destination,and the amount of freight was $75. 2.Purchased merchandise with freight cost of $125,shipped with the terms FOB destination. 3.Sold merchandise to a customer with freight cost of $90,shipped FOB shipping point. Required: Based on the above events,what is the total amount of freight that will be paid by Bob's Hobby Shop?

The amount of Retained Earnings at December 31,2012 is:

a)What is the effect on the accounting equation of the seller granting an "allowance" to a customer who was not pleased with the quality of merchandise received? b)What is the effect of the above situation on the accounting equation of the purchaser?