Question 1

Cushman Company had $800,000 in net sales,$350,000 in gross profit,and $200,000 in operating expenses.Cost of goods sold equals:

Accepted Answer

A) $150,000. 
B) $450,000. 
C) $800,000. 
D) $350,000. 
E) $200,000. 
A) $150,000. 
B) $450,000. 
C) $800,000. 
D) $350,000. 
E) $200,000. B

Question 2

On July 1,Ferguson Company sold merchandise in the amount of $5,800 to Tracey Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Ferguson uses the perpetual inventory system.On July 5,Tracey returns some of the merchandise.The selling price of the merchandise is $500 and the cost of the merchandise returned is $350.The entry or entries that Ferguson must make on July 5 is:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)    A

Question 3

A company that uses the perpetual inventory system purchased $8,500 of merchandise on March 25 with credit terms of 2/10,n/30.The invoice was paid in full on April 4.Prepare the journal entries to record the transactions on March 25 and April 4.

Accepted Answer

The answer of A company that uses the perpetual inventory...

Question 4

Prepare journal entries to record the following merchandising transactions of Margin Company,which applies the perpetual inventory system.Margin Company offers all of its credit customers credit terms of 2/10,n/30.

Accepted Answer

The answer of Prepare journal entries to record the following...

Question 5

Quick assets are defined as:

Accepted Answer

A) Cash,short-term investments,and inventory. 
B) Cash,short-term investments,and current receivables. 
C) Cash,inventory,and current receivables. 
D) Cash,noncurrent receivables,and prepaid expenses. 
E) Accounts receivable,inventory,and prepaid expenses. 
A) Cash,short-term investments,and inventory. 
B) Cash,short-term investments,and current receivables. 
C) Cash,inventory,and current receivables. 
D) Cash,noncurrent receivables,and prepaid expenses. 
E) Accounts receivable,inventory,and prepaid expenses.

Question 6

Expenses to promote sales by displaying and advertising merchandise,make sales,and deliver goods to customers are known as:

Accepted Answer

A) General and administrative expenses. 
B) Cost of goods sold. 
C) Selling expenses. 
D) Purchasing expenses. 
E) Non-operating activities. 
A) General and administrative expenses. 
B) Cost of goods sold. 
C) Selling expenses. 
D) Purchasing expenses. 
E) Non-operating activities.

Question 7

Tahoe Ski Company uses the perpetual inventory system and had the following transactions during January:
January 6: Purchased $4,000 of inventory.The seller's credit terms are 2/10,n/30.
January 8: Returned $200 worth of defective units and received full credit.
January 15: Paid the amount due,less the returned items.
Prepare journal entries to record each of the preceding transactions.

Accepted Answer

The answer of Tahoe Ski Company uses the perpetual inventory...

Question 8

A company reported the following information for the month of July:   Required:
Calculate this company's gross profit.

Accepted Answer

The answer of A company reported the following information for...

Question 9

The year-end adjusted trial balance of Gordon Produce for the current year,is shown below:   Prepare closing entries at December 31 for the current year.

Accepted Answer

The answer of The year-end adjusted trial balance of Gordon...

Question 10

A ______________________ income statement includes cost of goods sold as another expense and shows only one subtotal for total expenses.

Accepted Answer

The answer of A ______________________ income statement includes cost of...

Question 11

Fragment Company is a wholesaler that sells merchandise in large quantities.Its catalog indicates a list price of $300 on a particular product and a 40% trade discount is offered for quantity purchases of 50 units or more.The cost of shipping the merchandise is $7 per unit under terms FOB shipping point.If a customer purchases 100 units of this product,what is the amount of sales revenue that Fragment will record from this sale?

Accepted Answer

A) $18,000 
B) $30,000 
C) $18,700 
D) $29,300 
E) $30,700 
A) $18,000 
B) $30,000 
C) $18,700 
D) $29,300 
E) $30,700

Question 12

A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

Accepted Answer

A) Reflects an increase in amount due from a customer. 
B) Recognizes that a customer returned merchandise and/or received an allowance. 
C) Requires a debit memorandum to recognize the customer's return. 
D) Is recorded when a customer takes a discount. 
E) Reflects a decrease in amount due to a supplier. 
A) Reflects an increase in amount due from a customer. 
B) Recognizes that a customer returned merchandise and/or received an allowance. 
C) Requires a debit memorandum to recognize the customer's return. 
D) Is recorded when a customer takes a discount. 
E) Reflects a decrease in amount due to a supplier.

Question 13

Craig's Snowboards uses the perpetual inventory system and had the following sales transactions during June:   Prepare the journal entries that Craig's Snowboards must make to record these transactions.

Accepted Answer

The answer of Craig's Snowboards uses the perpetual inventory system...

Question 14

Juniper Company uses a perpetual inventory system.The company purchased $9,750 of merchandise on August 7 with terms 1/10,n/30.On August 11,it returned $1,500 worth of merchandise.On August 26,it paid the full amount due.The correct journal entry to record the merchandise return on August 11 is:

Accepted Answer

A) Debit Accounts Payable $1,500;credit Cash $1,500. 
B) Debit Accounts Payable $1,500;credit Merchandise Inventory $1,500. 
C) Debit Merchandise Inventory $1,500;credit Sales Returns $1,500. 
D) Debit Merchandise Inventory $1,500;credit Cash $1,500. 
E) Debit Accounts Payable $1,500;credit Purchase Returns $1,500. 
A) Debit Accounts Payable $1,500;credit Cash $1,500. 
B) Debit Accounts Payable $1,500;credit Merchandise Inventory $1,500. 
C) Debit Merchandise Inventory $1,500;credit Sales Returns $1,500. 
D) Debit Merchandise Inventory $1,500;credit Cash $1,500. 
E) Debit Accounts Payable $1,500;credit Purchase Returns $1,500.

Question 15

The following statements are true regarding the operating cycle of a merchandising company except:

Accepted Answer

A) The operating cycle begins with the purchase of merchandise. 
B) The operating cycle is shortened by credit sales. 
C) The operating cycle ends with the collection of cash from the sale of merchandise. 
D) The operating cycle can vary in length among different merchandising companies. 
E) The operating cycle sometimes involves accounts receivable. 
A) The operating cycle begins with the purchase of merchandise. 
B) The operating cycle is shortened by credit sales. 
C) The operating cycle ends with the collection of cash from the sale of merchandise. 
D) The operating cycle can vary in length among different merchandising companies. 
E) The operating cycle sometimes involves accounts receivable.

Question 16

Sales returns:

Accepted Answer

A) Refer to merchandise that customers return to the seller after the sale. 
B) Refer to reductions in the selling price of merchandise sold to customers. 
C) Represent cash discounts. 
D) Represent trade discounts. 
E) Are not recorded under the perpetual inventory system until the end of each accounting period. 
A) Refer to merchandise that customers return to the seller after the sale. 
B) Refer to reductions in the selling price of merchandise sold to customers. 
C) Represent cash discounts. 
D) Represent trade discounts. 
E) Are not recorded under the perpetual inventory system until the end of each accounting period.

Question 17

The current period's ending inventory is:

Accepted Answer

A) The next period's beginning inventory. 
B) The current period's cost of goods sold. 
C) The prior period's beginning inventory. 
D) The current period's net purchases. 
E) The current period's beginning inventory. 
A) The next period's beginning inventory. 
B) The current period's cost of goods sold. 
C) The prior period's beginning inventory. 
D) The current period's net purchases. 
E) The current period's beginning inventory.

Question 18

A company records the following journal entry: debit Cash $1,470,debit Sales Discounts $30,and credit Accounts Receivable $1,500.This means that a customer has taken what percentage cash discount for early payment?

Accepted Answer

A) 1% 
B) 2% 
C) 5% 
D) 10% 
E) 15% 
A) 1% 
B) 2% 
C) 5% 
D) 10% 
E) 15%

Question 19

____________________ can benefit a seller by decreasing the delay in receiving cash and reducing future collection efforts.

Accepted Answer

The answer of ____________________ can benefit a seller by decreasing...

Question 20

Beginning inventory plus the net cost of purchases is the _____________________.

Accepted Answer

merchandis

Exam 5: Accounting for Merchandising Operations

Cushman Company had $800,000 in net sales,$350,000 in gross profit,and $200,000 in operating expenses.Cost of goods sold equals:

A company that uses the perpetual inventory system purchased $8,500 of merchandise on March 25 with credit terms of 2/10,n/30.The invoice was paid in full on April 4.Prepare the journal entries to record the transactions on March 25 and April 4.

Prepare journal entries to record the following merchandising transactions of Margin Company,which applies the perpetual inventory system.Margin Company offers all of its credit customers credit terms of 2/10,n/30.

Quick assets are defined as:

Expenses to promote sales by displaying and advertising merchandise,make sales,and deliver goods to customers are known as:

A company reported the following information for the month of July: Required: Calculate this company's gross profit.

The year-end adjusted trial balance of Gordon Produce for the current year,is shown below: Prepare closing entries at December 31 for the current year.

A ______________________ income statement includes cost of goods sold as another expense and shows only one subtotal for total expenses.

A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

Craig's Snowboards uses the perpetual inventory system and had the following sales transactions during June: Prepare the journal entries that Craig's Snowboards must make to record these transactions.

Juniper Company uses a perpetual inventory system.The company purchased $9,750 of merchandise on August 7 with terms 1/10,n/30.On August 11,it returned $1,500 worth of merchandise.On August 26,it paid the full amount due.The correct journal entry to record the merchandise return on August 11 is:

The following statements are true regarding the operating cycle of a merchandising company except:

Sales returns:

The current period's ending inventory is:

A company records the following journal entry: debit Cash $1,470,debit Sales Discounts $30,and credit Accounts Receivable $1,500.This means that a customer has taken what percentage cash discount for early payment?

____________________ can benefit a seller by decreasing the delay in receiving cash and reducing future collection efforts.

Beginning inventory plus the net cost of purchases is the _____________________.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Appendix B: Time Value of Money

Appendix C: Activity-Based Costing

Filters