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Exam 5: Accounting for Retail Businesses

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Question 91

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On March 15, Monroe Sales sells $9,525.00 on account to Garrison Brewer with terms of 2/10, n/30. The cost of goods sold was $6,905.00.(a) Journalize the sale and the recognition of the cost of the sale.(b) On March 20, a $125.00 credit memo is given to Garrison Brewer due to merchandise that was the wrong color. Journalize this event. The cost of the returned merchandise was $65.00.(c) On March 25, Garrison Brewer submits payment in full. Journalize this event.

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Question 92

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The Corbit Corp. sold merchandise for $10,000 cash. The cost of the goods sold was $7,590. The journal entries to record this transaction under the perpetual inventory system would be

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Question 93

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Match each of the following items (a-h) with the appropriate definition below. -Expense account for recording shipping costs paid by the seller. A)Freight B)Delivery Expense C)Inventory D)Sales discount E)Purchases Returns and Allowances F)Debit memo G)Purchases discount H)Trade discount

What type of company would normally offer trade discounts to its customers?

Dollar Co. sold merchandise to Pound Co. on account, $25,500, terms 2/15, net 45. Pound Co. paid the invoice within the discount period. What is the sales amount to be recorded in the above transactions?

Which of the following costs would be included in inventory? (a)Purchase price (b)Insurance in transit FOB shipping point (c)Freight for delivery FOB shipping point (d)Repair due to negligence of receiving clerk (e)Receiving department employee salary (f)Cost of processing purchase orders

Using a perpetual inventory system, the entry to record the return of merchandise purchased on account includes a

Gadget Palace is a retailer selling unique hardware. Gadget Palace uses a perpetual inventory system. Journalize the following transactions: On July 5, Gadget Palace purchases inventory for sale from Turbo Tools for $11,400.00 with terms 2/10, n/30.On July 6, Gadget Palace pays Fast Truck Transport $75.00 for freight in on the July 5 order.On July 8, Gadget Palace receives a credit memo from Turbo Tools for $215.00 for damaged merchandise.On July 15, Gadget Palace pays Turbo Tools the balance due.​

When purchases of merchandise are made on account with a perpetual inventory system, the transaction is recorded with which entry?

Which of the following items would not affect the cost of inventory purchased during the period?

Journalize the following transactions for the Evans Company. Assume the company uses a perpetual inventory system.(a)Sold merchandise for $645. The cost of goods sold was $375.(b)Sold merchandise for $432 and accepted VISA as the form of payment.The cost of goods sold was $195.(c)Sold merchandise on account for $670. The cost of goods sold was $438.(d)Paid credit card fees for the month of $85.​

Which of the following accounts carry a normal debit balance?

What are the correct amounts missing from the condensed income statement of Arch Company?

Estimated Returns Inventory is an account used when adjusting for expected merchandise sales in the next period.

The following data were extracted from the accounting records of Dana Designs for the year ended March 31. Prepare the gross profit and cost of goods sold section of the income statement for the year ended March 31, using the periodic method.​

Travis Company purchased merchandise on account from a supplier for $5,700, terms 2/10, net 30. Travis Company paid for the merchandise within the discount period.​ Under a perpetual inventory system, record the journal entries required for the above transactions.

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

Taking advantage of a 2/10, n/30 purchases discount is equal to a yearly savings rate of approximately

The most important differences between a service business and a retail business are reflected in their operating cycles and financial statements.

Customer Refunds Payable is an account used to record merchandise returns from customers.