Exam 5: Accounting for Merchandising Operations

197 Assume that Vangundy Company uses a periodic inventory system and has these account balances: Purchases $600,000; Purchase Returns and Allowances $25,000; Purchase Discounts $11,000; and Freight-in $19,000; beginning inventory of $45,000; ending inventory of $55,000; and net sales of $750,000.Determine the cost of goods sold.

188 Prepare the necessary journal entries on the books of Jayhawk Carpet Company to record the following transactions, assuming a perpetual inventory system (you may omit explanations): (a) Jayhawk purchased $40,000 of merchandise on account, terms 2/10, n/30. (b) Returned $4,000 of damaged merchandise for credit. (c) Paid for the merchandise purchased within 10 days.

Under a periodic inventory system, acquisition of merchandise is debited to the

If a merchandising company sells land at more than its cost, the gain should be reported in the sales revenue section of the income statement.

Mineral Makers (MM) Company keeps its inventory records using a perpetual system.At December 31, 2011 the unadjusted balance in the inventory account is $64,000.Through a physical count on December 31, 2011, MM determines that its actual merchandise inventory at year-end is $62,500.Which of the following is true regarding the statement of financial position and the income statement of MM at December 31, 2011?

Sales should be recorded in accordance with the expense recognition.

Operating expenditures include salaries, utilities, advertising, and depreciation.Presentation of operating expenses by nature

When a seller grants credit for returned goods, the account that is credited is

Retailers and wholesalers are both considered merchandisers.

Reese Company purchased merchandise with an invoice price of $2,000 and credit terms of 2/10, n/30.Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms?

When goods are returned, the seller records the returned merchandise at its market value on the statement of financial position.

Inventory purchased for $2,500 subject to terms 2/10, net 30 could end up being reported on the statement of financial position at an amount greater than $2,500 if the discount isn't taken by the buyer.

Gain on sale of equipment and interest expense are reported under other income and expense in a merchandiser income statement.

The respective normal account balances of Purchases, Purchase Discounts, and Freight-in are

A periodic inventory system requires a detailed inventory record of inventory items.

For a merchandising company, all accounts that affect the determination of income are closed to the Income Summary account.

Sales revenue less cost of goods sold is called

Sampson Company's accounting records show the following at the year ending on December 31, 2011: Using the periodic system, the cost of goods purchased is

The collection of a $900 account after the 2 percent discount period will result in a

Purchase Returns and Allowances and Purchase Discounts are subtracted from Purchases to produce net purchases.