Question 1

The records of Penny Co. indicated that $415,000 of merchandise should be on hand on December 31. The physical inventory indicates that $370,000 of merchandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage for the year ended December 31.

Accepted Answer

The answer of The records of Penny Co. indicated that...

Question 2

Match each of the following terms (a-h)  with the correct definition below.
-Losses of inventory due to theft, damage, spoilage, etc. that cause the actual inventory on hand to be less than that on record.

Accepted Answer

A)  Credit terms
B)  FOB destination
C)  FOB shipping point
D)  Periodic inventory system
E)  Perpetual inventory systemF) Inventory shrinkageG) Single-step income statementH) Multiple-step income statementI) None of the above
J) C) and H)

Question 3

Other revenue and expenses are items that are not related to the primary operating activity.

Accepted Answer

A) True 
 B)False

Question 4

The cost of inventory is limited to the purchase price less any purchase discounts.

Accepted Answer

A) True 
 B)False

Question 5

Bountiful Company had sales of $650,000 and cost of goods sold of $200,000 during a year. The total assets balance at the beginning of the year was $175,000 and at the end of the year was $167,000. Calculate the asset turnover ratio.

Accepted Answer

A)   3.00
B)   3.80
C)   0.29
D)   0.26E) None of the above
F) B) and D)

Question 6

Under a perpetual inventory system

Accepted Answer

A)   accounting records continuously disclose the amount of inventory
B)   increases in inventory resulting from purchases are debited to Purchases
C)   there is no need for a year-end physical count
D)   the purchases returns and allowances account is credited when goods are returned to vendorsE) B) and C)
F) All of the above

Question 7

Where are selling and administrative expenses found on the multiple-step income statement?

Accepted Answer

A)   before gross profit
B)   after sales and before gross profit
C)   after net income and before expenses
D)   after gross profitE) All of the above
F) C) and D)

Question 8

Match each of the following items (a-h)  with the appropriate definition below.
-Early payment discount offered to customers by the seller.

Accepted Answer

A)  Freight
B)  Delivery Expense
C)  Inventory
D)  Sales discount
E)  Purchases Returns and AllowancesF) Debit memoG) Purchases discountH) Trade discountI) C) and F)
J) D) and E)

Question 9

During the current year, merchandise is sold for $86,000 cash and for $93,950 on account. The cost of the goods sold is $76,240. What is the amount of the gross profit?

Accepted Answer

Total sales, $179,95...

Question 10

When the perpetual inventory system is used, the inventory sold is debited to

Accepted Answer

A)   Supplies Expense
B)   Cost of Goods Sold
C)   Inventory
D)   SalesE) B) and D)
F) B) and C)

Question 11

In a merchandising business, sales minus operating expenses equals net income.

Accepted Answer

A) True 
 B)False

Question 12

The amount of the total cash paid to the seller for merchandise purchased for consumption would normally include

Accepted Answer

A)   only the list price
B)   only the sales tax
C)   the list price plus the sales tax
D)   the list price less the sales taxE) A) and B)
F) A) and C)

Question 13

The form of the balance sheet in which assets, liabilities, and stockholders' equity are presented in a downward sequence is called the report form.

Accepted Answer

A) True 
 B)False

Question 14

Using the following data taken from Payton Inc. which uses a periodic inventory system, prepare the cost of goods sold section of the income statement for the year ended May 31.
​

Accepted Answer

The answer of Using the following data taken from Payton...

Question 15

When goods are shipped FOB destination and the seller pays the freight charges, the buyer

Accepted Answer

A)   journalizes a reduction for the cost of the merchandise
B)   journalizes a reimbursement to the seller
C)   does not take a discount
D)   makes no journal entry for the freightE) C) and D)
F) A) and D)

Question 16

Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a

Accepted Answer

A)   debit to Accounts Payable
B)   debit to Inventory
C)   credit to Inventory
D)   credit to SalesE) B) and C)
F) C) and D)

Question 17

Match each of the following items (a-h)  with the appropriate definition below.
-Account used to record inventory on hand under a perpetual inventory system.

Accepted Answer

A)  Freight
B)  Delivery Expense
C)  Inventory
D)  Sales discount
E)  Purchases Returns and AllowancesF) Debit memoG) Purchases discountH) Trade discountI) A) and B)
J) C) and E)

Question 18

What amount will be paid in full settlement of Invoice 22392, assuming that credit for returns and allowances was received prior to payment and that the invoice was paid within the discount period.

Accepted Answer

A)   $7,694
B)   $7,574
C)   $7,530
D)   $7,128E) A) and C)
F) B) and C)

Question 19

Using the following information, what is the cost of goods sold

Accepted Answer

A)   $32,400
B)   $32,670
C)   $31,330
D)   $38,370E) All of the above
F) A) and D)

Question 20

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

Accepted Answer

A)   service companies
B)   retailers
C)   wholesalers
D)   online retailersE) A) and B)
F) B) and C)

Exam 5: Accounting for Retail Businesses

Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a

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Match each of the following items (a-h) with the appropriate definition below. -Account used to record inventory on hand under a perpetual inventory system.

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Match each of the following items (a-h) with the appropriate definition below. -Early payment discount offered to customers by the seller.

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The form of the balance sheet in which assets, liabilities, and stockholders' equity are presented in a downward sequence is called the report form.

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In a merchandising business, sales minus operating expenses equals net income.

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When goods are shipped FOB destination and the seller pays the freight charges, the buyer

Correct AnswerverifiedShow Answer

The amount of the total cash paid to the seller for merchandise purchased for consumption would normally include

Correct AnswerverifiedShow Answer

Under a perpetual inventory system

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The records of Penny Co. indicated that $415,000 of merchandise should be on hand on December 31. The physical inventory indicates that $370,000 of merchandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage for the year ended December 31.

Correct AnswerverifiedShow Answer

Other revenue and expenses are items that are not related to the primary operating activity.

Correct AnswerverifiedShow Answer

Using the following data taken from Payton Inc. which uses a periodic inventory system, prepare the cost of goods sold section of the income statement for the year ended May 31. ​

Correct AnswerverifiedShow Answer

The cost of inventory is limited to the purchase price less any purchase discounts.

Correct AnswerverifiedShow Answer

Where are selling and administrative expenses found on the multiple-step income statement?

Correct AnswerverifiedShow Answer

During the current year, merchandise is sold for $86,000 cash and for $93,950 on account. The cost of the goods sold is $76,240. What is the amount of the gross profit?

Correct AnswerverifiedTotal sales, $179,95...View AnswerShow Answer

When the perpetual inventory system is used, the inventory sold is debited to

Correct AnswerverifiedShow Answer

Match each of the following terms (a-h) with the correct definition below. -Losses of inventory due to theft, damage, spoilage, etc. that cause the actual inventory on hand to be less than that on record.

Correct AnswerverifiedShow Answer

Using the following information, what is the cost of goods sold

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Bountiful Company had sales of $650,000 and cost of goods sold of $200,000 during a year. The total assets balance at the beginning of the year was $175,000 and at the end of the year was $167,000. Calculate the asset turnover ratio.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What amount will be paid in full settlement of Invoice 22392, assuming that credit for returns and allowances was received prior to payment and that the invoice was paid within the discount period.

Correct AnswerverifiedShow Answer

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Using the following data taken from Payton Inc. which uses a periodic inventory system, prepare the cost of goods sold section of the income statement for the year ended May 31.

Correct Answer
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Total sales, $179,95...
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