Exam 5: Merchandising Operations and the Multiple-Step Income Statement

The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a

Detailed records of goods held for resale are not maintained under a

Lovett Company provides this information for the month of November, 2014: sales on credit $140,000; cash sales $50,000; sales discount $2,000; and sales returns and allowances $8,000. Prepare the sales revenues section of the income statement based on this information.

When using a periodic inventory system, which statement concerning the computation of cost of goods sold is correct?

With respect to the income statement

Financial information is presented below: Operating expenses \ 36,000 Sales revenue 150,000 Cost of goods sold 105,000 Gross profit would be

June 4 Deere Company purchased $3,500 worth of merchandise, terms n/30 from Gilbert Company. The cost of the merchandise was $2,500. 13 Deere returned $600 worth of goods to Gilbert for full credit. The goods had a cost of $400 to Johnson. 13 Deere paid the account in full. Instructions Prepare the journal entries to record these transactions in (a) Deere's records and (b) Gilbert's records. Assume use of the periodic inventory system for both companies.

On September 1, Pennington Supply had an inventory of 20 backpacks at a cost of $25 each. The company uses a perpetual inventory system. During September, the following transactions and events occurred. Sept. 4 Purchased 50 backpacks at $25 each from Sievert, terms 2/10, n/30. 6 Received credit of $100 for the return of 4 backpacks purchased on September 4 that were defective. 9 Sold 25 backpacks for $40 each to Lilly Books, terms 2/10, n/30. 13 Sold 15 backpacks for $40 each to Stoner Office Supply, terms n/30. 14 Paid Sievert in full, less discount. Instructions Journalize the September transactions for Pennington Supply.

If a company is given credit terms of 2/10, n/30, it should

In the credit terms of 1/10, n/30, the "1" represents the

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

The entry to record a sale of $700 with terms of 2/10, n/30 will include a

What is a difference between the profit margin and the gross profit rate?

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 91,000 The gross profit rate would be

Under IFRS, companies can apply revaluation to

A purchase invoice is a document that

If a purchaser using a perpetual inventory system pays the transportation costs, then the

On October 1, the Kile Bicycle Store had an inventory of 20 ten speed bicycles at a cost of $150 each. During the month of October the following transactions occurred. Assume Kile uses a perpetual inventory system. Oct. 4 Purchased 180 bicycles at a cost of $145 each from the Nixon Bicycle Company, terms 2/10, n/30. 5 Paid freight of $1,000 on the October 4 purchase. 6 Sold 10 bicycles from the October 1 inventory to Team America for $250 each, terms 2/10, n/30. 7 Received credit from the Nixon Bicycle Company for the return of 8 defective bicycles. 13 Issued a credit memo to Team America for the return of a defective bicycle. 14 Paid Nixon Bicycle Company in full, less discount. Instructions Prepare the journal entries to record the transactions assuming the company uses a perpetual inventory system.

Two categories of expenses in merchandising companies are

Adams Company is a retailer and uses a perpetual inventory system. Which statement is correct?