Exam 6: Merchandising Activities

At the beginning of 2018,England Dresses has an inventory of $140,000.However,management wants to reduce the amount of inventory on hand to $80,000 at December 31.If net sales for 2018 are forecast at $400,000 and the gross profit rate is expected to be 40%,compute the cost of the merchandise which management should expect to purchase during 2018.(Hint: First compute the expected cost of goods sold. )

To arrive at net sales:

VanRoy Supplies reports net sales of $1,750,000,net income of $175,000,and gross profit of $300,000.The company's cost of goods sold is:

Which of the following factors would suggest the use of a perpetual inventory system?

Net Sales is computed as total sales revenue less sales returns and allowances less sales discounts.

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

Which of the following appears in the income statement of a merchandising business,but not in the income statement of a business that renders only services?

The terms "sales discount," "purchase discount," and "cash discount" all refer to the same discount.

Sales returns and allowances is an expense account,and on the income statement it is added to cost of goods sold.

Bernice Beverages is not satisfied with the quality of merchandise purchased from Reade Supplies.If Reade Supplies agrees to settle this matter by granting Bernice Beverages a sales allowance,Bernice Beverages will:

If a company records a purchase at the gross invoice price and then takes advantage of the discount,the discount is treated as a reduction in the cost of goods sold.

Sutton Supplies reports net sales of $3,750,000,net income of $375,000,and gross profit of $900,000.The company's cost of goods sold is:

Washington maintains a subsidiary ledger account for each type of TV carried in the store.An examination of the account for the Flat TV model at the end of February would show:

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

Which of the following would not tend to make a manufacturer choose a perpetual inventory system?

Under the periodic inventory system,no effort is made to keep up-to-date records of either Inventory or Cost of Goods Sold as transactions occur.

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

In a periodic inventory system,when a sale is made there is no entry made to record the cost of goods sold.

Which of the following statements about a periodic inventory system is not correct?

Beacon Food Stores purchased canned goods at an invoice price of $4,000 and terms of 2/10,n/30.Half of the goods had been mislabeled and were returned immediately to the supplier.If Beacon Food pays the remaining amount of the invoice within the discount period,the amount paid should be: