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Exam 5: Accounting for Merchandising Businesses

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Question 71

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Details of invoices for purchases of merchandise are as follows: ​ Determine the amount to be paid in full settlement of each of the invoices,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 72

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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.

A) 3.00
B) 3.80
C) 0.29
D) 0.26

E) A) and B)
F) B) and D)

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Question 73

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Selected data from the ledger of Beck Co.,after adjustments,on September 30,the end of the fiscal year,are listed as follows: ​ Prepare a single-step income statement and a statement of retained earnings.

To encourage a buyer to pay before the end of the credit period,the seller may offer a

The inventory system employing accounting records that continuously disclose the amount of inventory is called

Bradford Company had sales of $700,000 for a year.The total assets at the beginning of the year were $240,000,and the total assets at the end of the year were $280,000.The asset turnover ratio is (round answer to 2 decimal places)

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

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

In a perpetual inventory system,merchandise returned to vendors reduces the inventory account.

Title to merchandise shipped FOB shipping point passes to the buyer upon delivery of the merchandise to the buyer's place of business.

The asset turnover ratio measures how effectively a business is using its assets to generate sales.

Marshall Supplies is a janitorial supply store that uses a perpetual inventory system.Journalize the following transactions: ​ Journal

Sampson Co.sold merchandise to Batson Co.on account,$46,000,terms 2 / 15,net 45.The cost of the goods sold is $38,500.The Batson Co.paid the invoice within the discount period.Prepare the entries that both Sampson and Batson Companies would record for the above.Assume both Sampson and Batson use a perpetual inventory system.

The retained earnings statement shows

Under the perpetual inventory system,a company purchases merchandise on terms 2 / 10,n / 30.The entry to record the purchase will include a debit to Cash and a credit to Sales.

When companies use a perpetual inventory system,the recording of the purchase of inventory will include a debit to Purchases.

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.

Which of the following costs would be included in inventory?

The single-step income statement is easier to prepare,but a criticism of this format is that gross profit and income from operations are not readily available.

Prepare a multiple-step income statement for Armstrong Co.from the following data for the year ended December 31. ​ Sales,$755,000; cost of goods sold,$330,000; administrative expenses,$35,000; interest expense,$30,000; rent revenue,$25,000; selling expenses,$50,000.