Exam 5: Merchandising Operations and the Accounting Cycle

Credit terms of 1/10 n/30 indicates that the buyer is:

Following is a random list of some of the accounts and their December 31, 2019, balances for Milita Merchandising. Milita Merchandising uses a periodic inventory system and all account balances are normal. Purchases \ 330,000 Sales revenue 470,000 Interest revenue 23,000 Salary expense 45,000 Freight in 17,000 Purchase discounts 31,000 Sales returns and allowances 40,000 Interest expense 18,000 Delivery expense 24,000 Sales discounts 27,000 Insurance expense 16,000 Purchase returns and allowances 49,000 R. Milita, Capital 35,000 Utilities expense 14,000 Amortization expense-equipment 10,000 R. Milita, Withdrawals 18,000 The beginning and ending amounts for inventory are $58,000 and $65,000, respectively. Calculate the following for Milita Merchandising: Net sales revenue underline Net purchases underline Cost of goods available for sale underline Cost of goods sold underline Gross margin underline Operating income underline Net income underline

The entry to record the sale of merchandise for cash includes a:

Under a perpetual inventory system, the entry to record the return of inventory sold on account for $360 with a cost of $210 would be recorded by the seller as a:

In a periodic inventory system, the entry to record the payment of shipping costs by the company buying the merchandise when the terms are FOB shipping point would include a:

Inventory includes all goods that the company owns and expects to use in normal operations.

In a periodic inventory system, the closing process includes:

Table 5-4 The following data is for the Atlantis Merchandising, which uses a periodic inventory system: Sales revenue \ 600,000 Interest revenue 12,000 Freight in 42,000 Beginning inventory 77,000 Purchase discounts 19,000 Sales reburns and allowances 33,000 Operating expenses 77,000 Interest expense 9,000 Ending inventory 81,000 Purchases 415,000 Sales discounts 35,000 Omar Atlantis, Withdrawals 71,000 Purchase returns and allowances 39,000 -Refer to Table 5-4. Net purchases for Atlantis Merchandising are:

Please refer to the following trial balance. Debit Credit Cash \ 5,000 Accounts receivable 14,000 Inventory 20,000 Supp lies 5,000 Land 100,000 Accounts payable \ 3,000 Notes payable 25,000 Capital 90,000 Withdrawals 1,000 Sales revenues 160,000 Sales returns and allowances 2,000 Sales discounts 3,000 Cost of goods sold 80,000 Salary expense 5,000 Utility expense 23,000 Rent expense 18,000 Interest expense 2,000 Totals \ 278,000 \ 278,000 How much is the gross profit percentage?

The entries to record a $4,500 sale on account under a perpetual inventory system, when the cost of the merchandise is $3,000, include a:

Table 5-6 The following are transactions for Latest Fashions for the month of June. $\text {June 2 Purchased \$ 2,000 of inventory under terms \(1 / 10 , \mathrm { n } / 60\) and \(\mathrm { FOB }\) shipp ing point from Trendy}$ $\text {Manufacturing. The merchandise had cost Trendy \$ 1,800.}$ $\text {June 7 Returned defective merchandise to Trendy Manufacturing with invoice price of \$ 400.}$ $\text {June 8 Paid the freight charges on the purchase from Trendy Manufacturing in cash for \$ 100.}$ $\text {June 9 Sold merchandise to New Miss Store on account for \$ 5,000 with terms \(2 / 15 , \mathrm { n } / 60 \mathrm { FOB }\) }$ $\text {shipping point. Cost of the merchandise sold was \$ 4,000.}$ $\text {June 10 Paid Trendy Manufacturing the balance on account.}$ $\text {June 12 Granted sales allowance of \$ 300 to New Miss Store for defective merchandise.}$ $\text {June 23 Collected balance owed from New Miss Store.}$ -Refer to table 5-6. Prepare the journal entries for Trendy Manufacturing for the transactions listed, assuming that Trendy uses a periodic inventory system.

When the seller accepts a return of undamaged goods from the purchaser, the seller's journal entries would include two entries, if they are using a perpetual inventory system.

Table 5-3 Sales revenue \ 750,000 Interest revenue 18,000 Freight in 44,000 Beginning inventory 75,000 Purchases discounts 20,000 Sales returns and allowances 44,000 Operating expenses 99,000 Interest expense 15,000 Ending inventory 72,000 Purchases 415,000 Sales discounts 25,000 William Browning, Withdrawals 61,000 Purchase reburns and allowances 36,000 -Refer to Table 5-3. The cost of goods sold is:

The gross margin percentage is calculated as:

The caption "Net sales" in a multi-step income statement is different if a business uses the periodic instead of the perpetual inventory system.

The entry to record the return of $250 of inventory to a supplier under the perpetual inventory system is recorded with a debit to:

When the buyer pays the freight costs, the entry to record the payment under a periodic inventory system would include a debit to:

Using a periodic inventory system, the entry to record the purchase of merchandise on account involves a:

Table 5-2 Sales revenue \ 382,000 Net sales revenue \ 360,000 Gross margin 255,000 Operating expenses 132,000 Interest expense 30,000 Interest revenue 60,000 -Referring to Table 5-2, cost of goods sold is:

Cost of goods sold is $108,000, beginning inventory is $20,000 and purchases is $100,000. What is ending inventory?