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Exam 6: Accounting for Merchandising Businesses

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Question 61

Multiple Choice

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Matching Match each of the following items (a-h) with the appropriate definition below. -Informs the seller of the reasons for the return of merchandise or the request for a price allowance.

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) All of the above
J) C) and H)

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Question 62

Multiple Choice

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Corbit Corp.sold merchandise for $10,000 cash.The cost of merchandise sold was $7,590.The journal entries to record this transaction under the perpetual inventory system would be

A) Cash 10,000Merchandise Inventory 10,000​Cost of Merchandise Sold 7,590Sales 7,590
B) Cash 10,000Sales 10,000​Cost of Merchandise Sold 7,590Merchandise Inventory 7,590
C) Cash 10,000Sales 10,000​Cost of Merchandise Sold 10,000Merchandise Inventory 10,000
D) Cash 7,590Sales 7,590​Cost of Merchandise Sold 7,590Merchandise Inventory 7,590

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

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Question 63

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Where are selling and administrative expenses found on the multiple-step income statement?

In a perpetual inventory system,the merchandise inventory account is only used to reflect the beginning inventory.

When a large quantity of merchandise is purchased,a reduction allowed on the sale price is called a trade discount.

Using the following information,what is the amount of income from operations?​​

Estimated Returns Inventory is an account used when adjusting for expected merchandise sales in the next period.

When the terms of sale are FOB shipping point,the buyer should pay the freight charges.

Sales to customers who use bank credit cards,such as MasterCard and VISA,are generally treated as

Who is responsible for the freight cost when the terms are FOB destination?

Merchandise with a list price of $4,700 is purchased on account,terms FOB shipping point,1/10,n/30.The seller prepaid freight costs of $100.Prior to payment,$1,600 of the merchandise is returned.The invoice is paid within the discount period.Record the foregoing transactions of the buyer in the sequence indicated below,assuming a perpetual inventory system is used.

Gross profit is equal to

Journalize the following transactions for both Abbott Co. (seller)and Dalton Co. (buyer).Assume both the companies use the perpetual inventory system.​ ​

Merchandise is ordered on November 10; the merchandise is shipped by the seller and the invoice is prepared,dated,and mailed by the seller on November 13; the merchandise is received by the buyer on November 18; the entry is made in the buyer's accounts on November 20.The credit period begins with what date?

Because many companies use computerized accounting systems,periodic inventory is widely used.

Buyers and sellers do not normally record the list prices of merchandise and the trade discounts in accounts.

Determine the amount to be paid in full settlement of each invoice,assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

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

President's salaries,depreciation of office furniture,and office supplies are

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