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Exam 6: Accounting for Merchandising Businesses

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Question 21

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Matching Match each of the following items (a-h) with the appropriate definition below. -Discount taken by the buyer for early payment of invoice.

A) Freight
B) Delivery Expense
C) Merchandise Inventory
D) Sales discount
E) Purchases Returns and Allowances
F) Debit memo
G) Purchase discount
H) Trade discount

I) B) and G)
J) D) and F)

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Question 22

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Journalize the following transactions assuming the perpetual inventory system:​ ​

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Question 23

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What is the major difference between a periodic and a perpetual inventory system?

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

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

On March 25,Osgood Company sold merchandise on account,$10,000,terms n/30.The applicable sales tax percentage is 7.5%.Record the transaction.​

Madison Company's perpetual inventory records indicate that $875,300 of merchandise should be on hand on October 31.The physical inventory indicates that $781,900 is actually on hand.Journalize the adjusting entry for the inventory shrinkage for Madison Company for the year ended October 31.

Gadget Palace is a retailer selling unique hardware.Gadget Palace uses a perpetual inventory system.Journalize the following transactions:​ ​ ​​

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

Journalize the following transactions assuming a perpetual inventory system:​ ​

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.

Under the perpetual inventory system,all purchases of merchandise are debited to the account

Journalize the following transactions for Evans Company.Assume the company uses a perpetual inventory system.​ ​

Matching Match each of the following items (a-h) with the appropriate definition below. -The cost associated with delivery of merchandise to the customer.

There is no difference between the recording of cash sales and the recording of MasterCard or VISA sales.

A sales invoice included the following information: merchandise price,$12,000; terms 1/10,n/eom,FOB shipping point with prepaid freight of $900 added to the invoice.Assuming that a credit for merchandise returned of $500 is granted prior to payment and the invoice is paid within the discount period,what is the amount of cash that should be received by the seller?

Cost of merchandise sold is the amount that the merchandising company pays for the merchandise it intends to sell.

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

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

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