Exam 6: Accounting for Merchandising Operations

Use this information to answer the following question. In addition,beginning merchandise inventory was $11,000 and ending merchandise inventory was $7,000. If beginning and ending merchandise inventories were ignored in computing net income,then net income would be

If it takes 45 days to sell inventory,30 days to collect for the sale,and creditors' payment terms are 60 days,the financing period is 135 days.

Adding together the ending merchandise inventory and cost of goods sold gives the cost of goods available for sale.

The entry to record a sales return from a customer would require a(n)

The perpetual inventory system

Joan and Pat Clair are sisters who each own and operate shops selling the latest electronics in neighboring towns.They decide to have a contest to see whose shop can be more profitable for the year.At year-end,Joan's records show sales of $210,000,cost of goods sold of $110,000,and operating expenses of $42,000.The records of Pat's shop reveal sales of $216,000,cost of goods sold of $124,000,and operating expenses of $38,000.Pat's shop also had other revenue of $6,000 received for allowing the shop to be used in taping a television show.Each sister claims to have won the contest.Provide explanations as to why each would think so,and then name the winner

On the income statement,freight-in is treated as an operating expense.

Which of the following is not considered an operating expense?

The amount of cost of goods available for sale during the year depends on the amounts of

Under the perpetual inventory system,the return of goods from a customer would increase Cost of Goods sold and decrease Merchandise Inventory.

The operating cycle is the average days' inventory on hand minus the average number of days to collect credit sales.

Given the following information,prepare in good form the cost of goods sold section of an income statement for 20x5.

The last step in the operating cycle is the

When the terms of sale include a sales discount,it usually is advisable for the buyer to pay within the discount period.

From the following data,calculate the amount of gross margin and gross purchases.

Gross margin is the difference between net sales and

When the terms are FOB destination,the title passes at the destinationand the seller pays the transportation costs.

Sales returns and allowances are deducted from gross sales on the income statement.

Which of the following is not considered in computing net cost of purchases?

Cost of goods sold would not be found on a single-step income statement.