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Exam 6: Accounting for Merchandising Businesses

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Question 111

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Determine the amount to be paid in full settlement of each invoice, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

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Question 112

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Under a periodic inventory system, the merchandise on hand at the end of the year is determined by a physical count of the inventory.

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Question 113

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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.

Inventory shortage is recorded when

When the terms of sale are FOB shipping point, the buyer should pay the freight charges.

Complete the following data taken from the condensed income statements for merchandising Companies X, Y, & Z.

If the physical count of the inventory revealed $158,000 of merchandise on hand and the inventory records reported $163,000, what would be the necessary adjusting entry to record inventory shortage?

Merchandise is sold for cash. The selling price of the merchandise is $5,000 and the sale is subject to a 7% state sales tax. The journal entry to record the sale would include

If the perpetual inventory system is used, an account entitled Cost of Merchandise Sold is included in the general ledger.

The primary difference between a periodic and perpetual inventory system is that a

If merchandise costing $3,500, terms FOB destination, 2/10, n/30, with prepaid freight costs of $125, is paid within 10 days, the amount of the purchases discount is $70.

Which of the following accounts would be included in the chart of accounts of a merchandising company

Marshall Supplies is a janitorial supply store. Marshall Supplies uses perpetual inventory. Use a General Journal to journalize the following four transactions during the month of July:

Which account is not classified as a selling expense?

During the current year, merchandise is sold for $117,500 cash and $241,750 on account. The cost of the merchandise sold is $157,400. What is the amount of the gross profit?

Service businesses provide services for income, while a merchandising business sells merchandise.

On March 25, 2014, Patton Company sold merchandise on account,$10,000. The applicable sales tax percentage is 8.5%. Record the transaction.

The entry to record the return of merchandise from a customer would include a