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Exam 6: Accounting for Merchandising Businesses

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Question 51

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Matching Match each of the following items (a-h) with the appropriate definition below. -Discount to government agencies or customers who purchase large quantities of merchandise.

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) A) and C)
J) G) and H)

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Question 52

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Freight is considered a cost of inventory under FOB shipping point.

A) True
B) False

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Question 53

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If the buyer is to pay the freight costs of delivering merchandise,delivery terms are stated as

In a merchandising business,operating income plus operating expenses is equal to

Merchandise subject to terms 2/10,n/30,FOB shipping point,is sold on account to a customer for $25,000.What is the amount of the sales discount allowable?

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.

In a periodic inventory system,the cost of merchandise purchased includes the cost of freight in.

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

Journalize the entries to record the following selected transactions:

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

If the ownership of merchandise passes to the buyer when the seller delivers the merchandise to the carrier,the terms are stated as FOB destination.

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

In a multiple-step income statement,the dollar amount for income from operations is always the same as net income.

Journalize the following merchandise transactions:

Based on the information below,journalize the entries for the seller and the buyer.Both use a perpetual inventory system.

Which of the following accounts should be closed at the end of the fiscal year?

Which of the following is not a difference between a retail business and a service business?

Which of the following accounts will not be found in the cost of merchandise sold section of the income statement for a company using the periodic inventory method?

Which of the following costs would be included in merchandise inventory?

The adjusting entry to record inventory shrinkage would generally include a debit to Cost of Merchandise Sold.