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Exam 4: Reporting and Analyzing Merchandising Operations

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Question 81

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Campagna Company uses the periodic inventory method.On January 5,Campagna sold merchandise to Kolb Inc.for $1,000 under credit terms of 2/10,n/30,FOB destination.The merchandise had cost $750.How would the company record this transaction?

A) Debit Accounts Receivable for $1,000,credit Sales for $1,000,debit Cost of Goods Sold for $750,and credit Merchandise Inventory for $750.
B) Debit Cash for $1,000,credit Sales for $1,000,debit Cost of Goods Sold for $750,and credit Merchandise Inventory for $750.
C) Debit Accounts Receivable for $1,000 and credit Sales for $1,000.
D) Debit Accounts Receivable for $1,000,debit Cost of Goods Sold for $750,and credit Gross Margin for $750.
E) Debit Accounts Receivable for $980,credit Sales for $980,debit Cost of Goods Sold for $750,and credit Merchandise Inventory for $750.

F) B) and C)
G) A) and B)

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Question 82

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A company that uses the perpetual inventory system purchased $8,500 worth of inventory on September 25.Terms of the purchase were 2/10,n/30.The invoice was paid in full on October 4.Prepare the journal entries to record these merchandise transactions.

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Question 83

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A seller usually prepares a ____________________ to confirm a buyer's return or allowance that informs the buyer of the seller's credit to the buyer's account receivable on the seller's books.

A company had a gross profit of $300,000 based on sales of $400,000,which means its cost of goods sold is equal to $700,000.

Under the ___________ system,each purchase,purchase return and allowance,purchase discount,and transportation-in transaction is recorded in a separate temporary account.

If goods are shipped FOB shipping point,the seller does not record revenue from the sale until the goods arrive at their destination because the transaction is not complete until that point.

Maxwell Inc.uses the periodic inventory method.Maxwell requested a price reduction from a vendor because the merchandise that was purchased did not meet specifications.The vendor sent Maxwell a credit memorandum for $4,100 to resolve the issue.How would Maxwell record this transaction?

A company has sales of $1,500,000,sales discounts of $102,000,sales returns and allowances of $123,000,shipping charges of $15,000,sales commissions of $34,000,net income of $263,500,and cost of goods sold of $420,000.What is the gross profit/margin ratio?

A merchandising company's ___________ begins with the purchase of merchandise and ends with the collection of cash from merchandise sales.

Explain the cost flows and operating activities of a merchandising company.

Describe the recording process (including costs) for purchasing merchandise inventory using a perpetual inventory system.

A company has net sales of $1,832,000,sales commissions of $194,000,net income of $366,400,and the gross profit ratio of 60%.What is the amount of cost of goods sold?

A _______________________ is a document the buyer issues to inform the seller of a debit made to the seller's account in the buyer's records.

The following information is for Trico and its competitor Unico: Required: A.Calculate the dollar amount of gross margin and the gross margin ratio to the nearest percent for each company for both years. B.Which company had the more favorable ratio for each year? C.Which company had the more favorable change in the gross margin ratio over this two-year period?

Credit terms include the specifics regarding the amount owed and timing of payments from a buyer to a seller.

Which of the following accounts would be closed with a debit?

The gross margin ratio equals net sales less ___________ divided by net sales.

On July 22,a company that uses the perpetual inventory system purchased merchandise inventory at a cost of $5,250 with credit terms 2/10,net 30.If the company pays for the purchase on August 1,what would be the appropriate journal entry?

Sales discounts can benefit a seller by decreasing the delay in receiving cash and ___________.

The acid-test ratio is defined as current assets divided by current liabilities.