Exam 5: Accounting for Merchandising Operations

Companies using International Financial Reporting Standards (IFRS) use a perpetual inventory system, while companies using U.S.GAAP use a periodic inventory system.

The sales revenue section of an income statement for a retailer would not include

Sales Allowances and Sales Discounts are both designed to encourage customers to pay their accounts promptly.

192 The income statement for Guinn Company for the year ended December 31, 2011 is as follows: Prepare the entries to close the revenue and expense accounts at December 31, 2011.You may omit explanations for the transactions.

Gould Shoe Store has a beginning merchandise inventory of €30,000.During the period, purchases were €140,000; purchase returns, €4,000; and freight-in €10,000.A physical count of inventory at the end of the period revealed that €20,000 was still on hand.The cost of goods available for sale was

The revenue recognition principle applies to merchandisers by recognizing sales revenues when they are earned.

A merchandising company using a perpetual inventory system will usually need to make an adjusting entry to ensure that the recorded inventory agrees with physical inventory count.

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

On November 2, 2010, Griffey Company has cash sales of €4,200 from merchandise having a cost of €3,000.The entries to record the day's cash sales will include:

189 Bryant Company sold goods on account to Kolmer Enterprises with terms of 2/10, n/30.The goods had a cost of $600 and a selling price of $800.Both Bryant and Kolmer use a perpetual inventory system.Record the sale on the books of Bryant and the purchase on the books of Kolmer.

The respective normal account balances of Sales, Sales Returns and Allowances, and Sales Discounts are

191 Nen Company uses a perpetual inventory system.During May, the following transactions and events occurred. Instructions Journalize the May transactions for Nen Company (seller) assuming that Nen uses a perpetual inventory system.You may omit explanations.

Purchase returns are recorded by the buyer as a decrease to inventory on the statement of financial position.

Freight costs paid by a seller on merchandise sold to customers will cause an increase

During 2011, Yoder Enterprises generated revenues of $90,000.The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Yoder's income from operations is

The primary source of revenue for merchandising companies is

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

The collection of a ¥7,000 account within the 2 percent discount period will result in a

During August, 2011, Joe's Supply Store generated revenues of $30,000.The company's expenses were as follows: cost of goods sold of $12,000 and operating expenses of $2,000.The company also had rent revenue of $500 and a gain on the sale of a delivery truck of $1,000. Joe's gross profit for August, 2011 is

A credit sale of $1,800 is made on July 15, terms 2/10, n/30, on which a return of $100 is granted on July 18.What amount is received as payment in full on July 24?