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Exam 5: Accounting for Merchandising Businesses

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Question 71

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If the physical count of the inventory revealed $158,000 of merchandise on hand and the inventory records reported $163,000,what would be the necessary adjusting entry to record inventory shortage?

A) Merchandise inventory debit $158,000;Cost of Merchandise Sold credit $158,000.
B) Merchandise inventory debit $5,000;Cost of Merchandise Sold credit $5,000.
C) Cost of Merchandise Sold debit $163,000;Merchandise Inventory credit $158,000.
D) Cost of Merchandise Sold debit $5,000;Merchandise Inventory credit $5,000.

E) B) and D)
F) None of the above

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Question 72

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The primary difference between a periodic and perpetual inventory system is that a

A) periodic system determines the inventory on hand only at the end of the accounting period
B) periodic system keeps a record showing the inventory on hand at all times
C) periodic system provides an easy means to determine inventory shrinkage
D) periodic system records the cost of the sale on the date the sale is made

E) B) and C)
F) A) and B)

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Question 73

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The records of Nevada Co.indicated that $420,000 of merchandise should be on hand on December 31,2010.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 31,2010.

When comparing a retail business to a service business,the financial statement that changes the most is the

Under a periodic inventory system,closing entries will include

When the three sections of a balance sheet are presented on a page in a downward sequence,it is called the

Construct a chart of accounts,assigning account numbers and arranging the accounts in balance sheet and income statement order ("1" for assets,and so on).Each account number is three digits.Contra accounts should designated with a decimal of the account (100.1 for contra of account 100).Assets and liabilities should be in order of liquidity,expenses should be in alphabetical order.

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

Which of the following accounts would be included in the chart of accounts of a merchandising company using the: (a)periodic inventory system, (b)perpetual inventory system,or (c)both systems?

Details of a purchase invoice and related credit memo are summarized as follows: Assume that the credit memo was received prior to payment and that the invoice is paid within the discount period.Determine the following:

Sales Returns and Allowances is a contra-revenue account.

Isaac Co.sells merchandise on credit to Sonar Co in the amount of $9,600.The invoice is dated on April 15 with terms of 1/15,net 45.If Sonar Co.chooses not to take the discount,by when should the payment be made?

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

Prepare a multiple-step income statement for Armour Co.from the following data for the year ended December 31,2014.

The Corbit Corp.sold merchandise $10,000 for cash.The cost of the merchandise sold was $7,590.The journal entry(s) to record this transaction would be

Which of the following accounts usually has a debit balance?

Which account will be included in both service and merchandising companies closing entries?

Merchandise is sold for cash.The selling price of the merchandise is $5,000 and the sale is subject to a 7% state sales tax.The journal entry to record the sale would include

Under the periodic inventory system,the journal entry to record the cost of merchandise sold at the point of sale will include the following account

On the income statement in the single-step form,the total of all expenses is deducted from the total of all revenues.