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Exam 5: Accounting for Merchandising Businesses

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Question 31

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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 32

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

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Question 33

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Under a periodic inventory system,the cost of inventory on hand at the end of the accounting period is determined by a physical count of the inventory.

Most retailers record all credit card sales as credit sales.

Abbey Co.sold merchandise to Gomez Co.on account,$35,000,terms 2 / 15,net 45.The cost of the goods sold is $24,500.Abbey Co.issued a credit memo for $3,600 for merchandise returned that originally cost $1,700.Gomez Co.paid the invoice within the discount period.What is the amount of gross profit earned by Abbey Co.on the above transactions?

A sale of $750 on account subject to a sales tax of 6% would be recorded as an account receivable of $750.

In the merchandising income statement,sales will be reduced by administrative expenses to arrive at operating income.

Which of the following accounts has a normal credit balance?

Using the following information,what is the amount of gross profit? ​ ​ ​

Abbey Co.sold merchandise to Gomez Co.on account,$35,000,terms 2 / 15,net 45.The cost of the goods sold was $24,500.Abbey Co.issued a credit memo for $3,600 for merchandise returned that originally cost $1,700.Gomez Co.paid the invoice within the discount period.What is the amount of gross profit earned by Abbey Co.on the above transactions?

Prepare a single-step income statement from the following data for Burt Co.,taken from the ledger after adjustments on December 31,the end of the fiscal year.

Cost of goods sold is often the largest expense on a merchandising company income statement.

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

For each of the following,calculate the cost of inventory reported on the balance sheet.

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

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

Which of the following accounts will only be found in the chart of accounts of a merchandising company?

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

Discuss the following statement: ​ "Operating cycles for all merchandising businesses are the same,with similar profit margins." ​ Include an example(s)to illustrate your explanation.

The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a