Exam 4: Merchandising Operations and the Multiple-Step Income Statement

Bolton Company's gross profit rate last year was 32.0% and this year it is 28.4%. Which of the following would not be a possible cause for this decline in the gross profit rate?

In a single-step income only one step is required in determining net income.

When the terms of sale include a sales discount, it usually is advisable for the buyer to pay within the discount period.

During the year, Megan's Pet Shop's merchandise inventory decreased by $80,000. If the company's cost of goods sold for the year was $1,200,000, purchases would have been

Under the periodic system, when a customer returns goods, Purchases Returns and Allowances is debited.

The terms 2/10, net/30 mean that a 2 percent discount is allowed on payments made within the 10 days discount period.

A sales invoice is prepared when goods

Piper Company sells merchandise on account for $1,800 to Morton Company with credit terms of 2/10, n/30. Morton Company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period. What entry does Piper Company make upon receipt of the check?

Betty's Fabrics sold merchandise for $171,000 cash during the month of July. Returns that month totaled $3,600. If the company's gross profit rate is 40%, Betty will report monthly net sales revenue and cost of goods sold of

Stan's Market recorded the following events involving a recent purchase of inventory: Received goods for $120,000, terms 2/10, n/30. Returned $2,400 of the shipment for credit. Paid $600 freight on the shipment. Paid the invoice within the discount period. As a result of these events, the company's inventory

Which of the following items does not result in an adjustment in the merchandise inventory account under a perpetual system?

Tony's Market recorded the following events involving a recent purchase of inventory: Received goods for $80,000, terms 2/10, n/30. Returned $1,600 of the shipment for credit. Paid $400 freight on the shipment. Paid the invoice within the discount period. As a result of these events, the company's inventory

Sales revenue

The gross profit amount is generally considered to be more informative than the gross profit rate.

The revenue recognition principle applies to merchandising companies by recognizing sales revenues when the performance obligation is satisfied.

Financial information is presented below: Operating expenses \ 28,000 Sales returns and allowances 7,000 Sales discounts 3,000 Sales revenue 150,000 Cost of goods sold 98,000 Gross profit would be

Financial information is presented below: Operating expenses \ 45,000 Sales returns and allowances 3,000 Sales discounts 7,000 Sales revenue 160,000 Cost of goods sold 96,000 The profit margin would be

When an invoice is paid within the discount period, the amount of the discount decreases Inventory.

When goods are returned that relate to a prior cash sale

Casin Company sells $900 of merchandise on account to Delta Exploration with credit terms of 2/10, n/30. If Delta Exploration remits a check taking advantage of the discount offered, what is the amount of Delta Exploration's check?