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Exam 5: Accounting for Merchandising Businesses

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Question 51

Multiple Choice

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If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as

A) FOB shipping point
B) FOB destination
C) FOB n/30
D) FOB buyer

E) A) and B)
F) B) and C)

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Question 52

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What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

A) gross profit
B) income from operations
C) net income
D) gross sales

E) C) and D)
F) B) and D)

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Question 53

Multiple Choice

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Using the following information, what is the amount of merchandise available for sale?

Selected accounts and amounts appear below. Journalize the closing entry, assuming a perpetual inventory system.

On March 29th, customers who owe $10,500.00 for purchases made on Sonic Sales Company submit payments of $4,250.00. Journalize this event.

Cumberland Co. sells $2,000 of inventory to Hancock Co. for cash. Cumberland paid $1,250 for the merchandise. Under a perpetual inventory system, which of the following journal entry(ies) would be recorded?

Under the periodic inventory system, the journal entry to record the cost of merchandise sold at the point of sale will include the following account

Calculate the gross profit for Jonas Company based on the data given below:

On March 4th, Micro Sales makes $4,850.00 in sales on bank credit cards which charge a 2.5% service charge and deposit the funds into Micro Sales bank accounts at the end of the business day. Journalize the sales and recognition of expense.

If the buyer bears the freight costs related to a purchase, the terms are said to be FOB destination.

Isaac Co. sells merchandise on credit to Sonar Co in the amount of $5,700. The invoice is dated on April 1 with terms of 1/15, net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?

Calculate the gross profit for Jonas Company based on the data given below:

One of the most important differences between a service business and a retail business is in what is sold.

Bargain Wholesalers sells pet supplies to retailers including Pet World Supplies. Bargain Wholesalers uses perpetual inventory. Use a General Journal to journalize the following three transactions during the month of May:

Under the perpetual inventory system, a company purchases merchandise on terms 2/10, n/30. If payment is made within 10 days of the purchase, the entry to record the payment will include a credit to Cash and a credit to Purchase Discounts.

If the merchandise costs $3,500, insurance in transit costs $250, tariff costs $75, processing the purchase order by the purchasing department costs $50, and the company receiving dock personnel cost $25, what is the total cost charged to the merchandise?

The adjusting entry to record inventory shrinkage would generally include a debit to Cost of Merchandise Sold.

As we compare a merchandise business to a service business, the financial statement that changes the most is the Balance Sheet.

In the periodic inventory system, purchases of merchandise for resale are debited to the Purchases account.

Dorman Co. sold merchandise to Smith Co. on account, $23,500, terms 2/15, net 45. The cost of the merchandise sold is $16,000. Dorman Co. issued a credit memo for $1,750 for merchandise returned that originally cost $1,400. The Smith Co. paid the invoice within the discount period. What is amount of net sales from the above transactions?