Question 1

Mason Lawn Equipment uses a perpetual inventory system.Journalize the following sales transactions for this company.Explanations are not required.

Accepted Answer

The answer of Mason Lawn Equipment uses a perpetual inventory...

Question 2

A sales allowance is recorded with a credit to Accounts Payable.

Accepted Answer

A) True 
 B)False

Question 3

A company made net sales revenue of $540,000,and cost of goods sold totaled $324,000.Calculate its gross profit percentage.

Accepted Answer

A) 40% 
B) 60% 
C) 130% 
D) 315%

Question 4

The Sales Discounts account is a contra account to the ________ account.

Accepted Answer

A) Purchases 
B) Sales Revenue 
C) Merchandise Inventory 
D) Sales Returns and Allowances

Question 5

Glasgow Company uses the periodic inventory system.On February 1,the corporation purchased inventory on account for $16,000.The terms were 3/10,n/30.On February 2,it returned damaged goods worth $500 to the supplier and was granted an allowance.Give the journal entry for the payment if the invoice is paid after the discount period.(Round your answers to the nearest dollar. )

Accepted Answer

A) 
 
B) 
 
C) 
 
D)

Question 6

Which of the following is true of the gross profit percentage?

Accepted Answer

A) Gross profit percentage is the same for companies in all industries. 
B) Gross profit percentage is used to measure the solvency of a company. 
C) The gross profit percentage is one of the most carefully watched measures of profitability. 
D) A service company must show its gross profit percentage in its Income Statement.

Question 7

The key difference in the closing process under the periodic inventory system is how merchandise inventory is handled.

Accepted Answer

A) True 
 B)False

Question 8

G-mart,a small-scale grocer,wants to introduce an inventory system to track its inventory.G-mart does not currently use optical scanning registers and computer systems.The perpetual inventory system is most suitable for its operations.

Accepted Answer

A) True 
 B)False

Question 9

Under the perpetual inventory system,purchase returns or allowances are debited to the Merchandise Inventory account by the purchaser.

Accepted Answer

A) True 
 B)False

Question 10

A small increase in the gross profit percentage may indicate an important rise in income.

Accepted Answer

A) True 
 B)False

Question 11

Describe the calculation of cost of goods sold when using the periodic inventory system.

Accepted Answer

The answer of Describe the calculation of cost of goods...

Question 12

A merchandiser uses a perpetual inventory system.The beginning Owner,Capital balance of the merchandiser was $95,000.During the year,Sales Revenue amounted to $80,000,Sales Returns and Allowances were $1,300,Sales Discounts were $2,700,Cost of Goods Sold was $40,000,and all other expenses totaled $13,000.The company paid $24,000 in withdrawals to the owner.The last step in the closing process would include ________.

Accepted Answer

A) a debit to Income Summary for $57,000 
B) a credit to Income Summary for $80,000 
C) a debit to the Owner,Capital account for $20,000 
D) a debit to the Owner,Capital account for $24,000

Question 13

The main expense of a merchandiser is usually ________.

Accepted Answer

A) cost of goods sold 
B) current assets 
C) selling and administrative expenses 
D) production overhead

Question 14

The gross profit percentage measures the profitability of each sales dollar above the cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 15

A merchandiser uses a perpetual inventory system.The third step in the process of closing the accounts of a merchandiser is to ________.

Accepted Answer

A) make the revenue accounts equal to zero via the Income Summary account 
B) make the Income Summary account equal to zero via the Owner,Withdrawals account 
C) make the expense accounts equal to zero via the Income Summary account 
D) make the Income Summary account equal to zero via the Owner,Capital account

Question 16

Which of the following entries would be made to record the purchase of inventory on account,if a company uses the perpetual inventory system?

Accepted Answer

A) a debit to Purchases and a credit to Accounts Payable 
B) a debit to Accounts Payable and a credit to Purchases 
C) a debit to Merchandise Inventory and a credit to Accounts Payable 
D) a debit to Accounts Payable and a credit to Merchandise Inventory

Question 17

Under the perpetual inventory system,discounts taken on an invoice by the buyer would be ________.

Accepted Answer

A) debited to Merchandise Inventory 
B) credited to Merchandise Inventory 
C) debited to Cost of Goods Sold 
D) credited to Cost of Goods Sold

Question 18

A company that uses the perpetual inventory system purchased inventory for $910,000 on account with terms of 4/7,n/20.Which of the following correctly records the payment made 15 days after the date of invoice?

Accepted Answer

A) 
 
B) 
 
C) 
 
D)

Question 19

Net sales revenue is equal to sales revenue less cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 20

An adjusted trial balance for a merchandiser is given below.
  
Give the journal entry to close the Sales Revenue account.

Accepted Answer

The answer of An adjusted trial balance for a merchandiser...

Exam 5: Merchandising Operations

Mason Lawn Equipment uses a perpetual inventory system.Journalize the following sales transactions for this company.Explanations are not required.

A sales allowance is recorded with a credit to Accounts Payable.

A company made net sales revenue of $540,000,and cost of goods sold totaled $324,000.Calculate its gross profit percentage.

The Sales Discounts account is a contra account to the ________ account.

Which of the following is true of the gross profit percentage?

The key difference in the closing process under the periodic inventory system is how merchandise inventory is handled.

G-mart,a small-scale grocer,wants to introduce an inventory system to track its inventory.G-mart does not currently use optical scanning registers and computer systems.The perpetual inventory system is most suitable for its operations.

Under the perpetual inventory system,purchase returns or allowances are debited to the Merchandise Inventory account by the purchaser.

A small increase in the gross profit percentage may indicate an important rise in income.

Describe the calculation of cost of goods sold when using the periodic inventory system.

The main expense of a merchandiser is usually ________.

The gross profit percentage measures the profitability of each sales dollar above the cost of goods sold.

A merchandiser uses a perpetual inventory system.The third step in the process of closing the accounts of a merchandiser is to ________.

Which of the following entries would be made to record the purchase of inventory on account,if a company uses the perpetual inventory system?

Under the perpetual inventory system,discounts taken on an invoice by the buyer would be ________.

A company that uses the perpetual inventory system purchased inventory for $910,000 on account with terms of 4/7,n/20.Which of the following correctly records the payment made 15 days after the date of invoice?

Net sales revenue is equal to sales revenue less cost of goods sold.

An adjusted trial balance for a merchandiser is given below. Give the journal entry to close the Sales Revenue account.