Exam 5: Retailing Operations

Sales revenues were $20 000, Sales returns and allowances were $300, Sales discounts were $700, Cost of sales were $12 000, and all other expenses totaled $4 500. The first closing entry would include which of the following line items?

Which of the following is subtracted from Sales revenue to arrive at Net sales revenue?

Which of the following is GENERALLY the major cost of inventory?

A firm uses the perpetual inventory method. Which of the following entries would be made to record a purchase of inventory on credit?

Referring to the following table, what is Gross profit?

A company's cost of sales is $1 000 000. Its average inventory is $100 000. Which of the following is its rate of inventory turnover?

Which of the following is the result of cost of sales divided by average inventory?

Cost of sales appears on both a descriptive format income statement and a functional format income statement.

An invoice is dated 28 April for $235.00 and is shown with payment terms of 5/10, n/30. If the invoice is paid on 12 May, the amount to pay will be:

If a firm uses the periodic inventory method, which of the following is subtracted from Purchases to arrive at Net purchases?

A firm uses the periodic inventory method. Which of the following entries would be made to record a purchase of inventory on credit?

A firm sells inventory for $1 000, including GST, on credit with terms of 2/10, n/30. Defective inventory of $200, including GST, is returned 2 days later. Which of the following entries would be made to record the cash receipt for the sale if the payment is received within 10 days?

Which of the following is the gross profit percentage?

Referring to the following table, what is Net sales revenue?

Credit terms of 2/10, n/30 mean that the purchaser may deduct 2 percent if the invoice is paid within 10 days, with the full amount due in 30 days if the early payment option is NOT exercised.

Using the perpetual inventory system, discounts taken on an invoice, such as 3/10, n/30, would be:

When a firm is purchasing inventory, and there are either returns or allowances for damaged goods, those amounts are recorded as a debit to the Sales returns and allowances account.

A firm receives an invoice that indicates that title to the inventory will pass to the firm when they receive the goods. This situation is described as FOB destination.

A firm that uses the perpetual inventory method purchases inventory of $1 000 on credit with terms of 2/10, n/30. Defective inventory of $200 is returned 2 days later and the accounts are appropriately adjusted. If the firm paid the vendor 25 days later, which of the following entries would be made to record the payment? All amounts include GST.

Michelin Jewellers completed the following transactions. Michelin Jewellers uses the perpetual inventory system. On 2 April, Michelin sold $9 900 of inventory, including GST, to a customer on credit with terms of 3/15, n/30. Michelin's cost of the inventory sold was $5 000, net of GST. On 4 April, the customer reported damaged goods and Michelin granted a $1 100 sales allowance, including GST. On 10 April, Michelin received payment from the customer. If this were the only transaction for the period, what amount would be shown on the income statement for Net sales revenue?