Exam 6: Merchandising Activities

Net sales and gross profit Mayflower Supply House had gross sales revenue of $1,700,000,cost of goods sold of $950,000,sales returns and allowances of $52,500,and allowed sales discounts of $30,000. Compute for the year:

Purchase Discounts Lost is shown as a reduction of cost of goods sold in the income statement.

The operating cycle:

The contra-revenue accounts,Sales Returns and Allowances and Sales Discounts,should be closed by crediting these accounts and debiting Income Summary for each account.

[The following information applies to the questions displayed below.] Michael uses its periodic inventory system and the following information is available: -What is the gross profit?

In a periodic inventory system,cost of goods sold is the cost of goods available for sale less ending inventory.

Berg Tooling reports net sales of $325,000,gross profit of $175,000,and net income of $15,000.The company's cost of goods sold is:

When using a perpetual inventory system,the Inventory account is credited when a sale is made.

In a retail department store with an efficient perpetual inventory system,the quantities of goods actually on hand are probably somewhat more than the quantities indicated in the accounting records.

Pet Foods Plus purchased bagged dog food at an invoice price of $6,000 and terms of 2/10,n/30.Half of the bags had been damaged in shipment and delivery was refused.If Pet Foods Plus pays the remaining amount of the invoice within the discount period,the amount paid should be:

If cost of goods sold is $480,000 and the gross profit rate is 40%,what is the gross profit?

Cost of goods sold is an expense shown separately from other expenses in an income statement.

The Sales Returns and Allowances account is debited when:

Using gross profit rates Explain how the gross profit rate for a particular product is determined.How would you expect the manager of a large department store to use these gross profit rates in deciding which products to feature in the store's window displays and in determining the location of various types of merchandise within the store? Explain.

Bartner Furniture,Inc.purchased inventory at $1,200 list price and the terms were 3/10 n/30.If Bartner paid the full invoice price on the 10th day,what amount of cash did Bartner pay to settle the account?

If a company has 240 credit customers,there are 480 individual customer accounts in the accounts receivable subsidiary ledger (one for sales for each customer,one for receipts from each customer).

The operating cycle of a merchandiser is longer and more complex than the operating cycle of a manufacturer.

If gross profit and cost of goods sold are added together,they should equal sales.

A factor that might suggest that a perpetual inventory system is appropriate is that inventory includes many different kinds of low-cost items.

Inventory shrinkage refers to unrecorded decreases in inventory resulting from breakage,theft,and shoplifting.