Exam 4: Reporting and Analyzing Merchandising Operations

If a buyer does not take advantage of a supplier's credit terms of 2/10,n/30,and instead pays the invoice in full at the end of 30 days,by not taking the discount the buyer loses the equivalent of 36.5% annual interest on the amount of the purchase.

A periodic inventory system requires updating of the inventory account only at the beginning of an accounting period.

Prepare journal entries to record the following merchandise transactions of Martinez Excavation Equipment,which applies the perpetual inventory system and the gross method of recording invoices.

When preparing an unadjusted trial balance using a periodic inventory system,the amount shown for Merchandise Inventory is:

A company purchases merchandise with a catalog price of $20,000.The company receives a 35% trade discount from the seller.The seller also offers credit terms of 2/10,n/30.Assuming no returns were made and that payment was made within the discount period,what is the net cost of the merchandise?

A retailer buys products from manufacturers and sells them to wholesalers.

The adjusting entry to reflect inventory shrinkage is a debit to Cost of Goods Sold and a credit to Merchandise Inventory.

Explain the difference between the single-step and multiple-step income statements.

The acid-test ratio is also called the quick ratio.

All of the following accounts are included in the calculation of gross profit except:

A company had net sales of $340,500,its cost of goods sold was $257,000,and its net income was $13,750.The company's gross margin ratio equals 24.5%.

Prentice Company had cash sales of $94,275,credit sales of $83,450,sales returns and allowances of $1,700,and sales discounts of $3,475.Prentice's net sales for this period equal:

On May 1,Anders Company purchased merchandise in the amount of $5,800 from Shilling,with credit terms of 2/10,n/30.Anders uses the perpetual inventory system and the gross method.The journal entry or entries that Anders will make on May 1 is:

From the adjusted trial balance for Fabricated Products Company given below,prepare the necessary closing entries.

A perpetual inventory system is able to directly measure and monitor inventory shrinkage and there is no need for a physical count of inventory.

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?

Using the following year-end information for Bauman,LLC,calculate the current ratio and acid-test ratio: Cash 48,000 Short-term investments 12,000 Accounts receivable 45,000 Inventory 225,000 Prepaid expenses 12,500 Accounts payable 86,500 Other current payables 22,000

A merchandising company's operating cycle begins with the purchase of merchandise and ends with the collection of cash from the sale.

Cost of goods sold:

A ________ income statement format shows detailed computations of net sales and other costs and expenses,and reports subtotals for various classes of items.