Exam 6: The Operating Cycle and Merchandising Operations

Management is responsible for establishing a satisfactory system of internal control.

The net cost of purchases is found by adding freight-in to net purchases.

Under a perpetual inventory system,is it necessary to take a physical inventory at the end of the period? Why or why not?

A sale on June 21 with terms of n/10 eom is due to be collected by

Using the following information,calculate for 2013 (a)net sales,(b)cost of goods sold,(c)gross margin,and (d)net income before taxes.

Chancellor Company purchased merchandise worth $900 on credit,terms n/30.What is the required journal entry to record the transaction under the periodic inventory system?

Under the perpetual inventory system,in addition to making the entry to record a sales return,a company would

The entry to record payment of a $1,500 purchase within the 2 percent discount period would include a(n)

Using the following information,calculate (a)net sales,(b)beginning merchandise inventory,(c)gross margin,and (d)net income.

The change in merchandise inventory level from the beginning to the end of the year does not affect cost of goods sold.

An accountant is responsible for the following activities: (1)receiving all cash; (2)maintaining the general ledger; (3)maintaining the accounts receivable subsidiary ledger that includes the individual records of each customer; (4)maintaining the journals for recording sales,purchases,and cash receipts; and (5)preparing monthly statements to be sent to customers.As a service to customers and employees,the company allows the accountant to cash checks of up to $50 with money from the cash receipts.When deposits are made,the checks are included in place of the cash receipts.What weaknesses in internal control exist in this system?

Assume that on July 24,Bond Company had a sale totaling $11,019 with a related cost of goods sold of $7,604.Record this transaction in journal form assuming the perpetual inventory system was in use.

Tillman,Inc.,entered into the transactions listed below.In the journal provided,prepare Tillman's journal entries,assuming use of the periodic inventory system.Omit explanations.

Use this information to answer the following question. The total amount of working capital is

On June 3,Win-Tel Company sold merchandise worth $800 on credit,terms 2/10,n/30.The merchandise sold had cost $550.The customer paid the amount on June 15. What is the required journal entry to record the payment received under the periodic inventory system?

Use this balance sheet and income statement for the first year of operations for Layton Novelties,Inc.to answer the following question. The current ratio for Layton Novelties is

Which of the following documents is sent to the vendor (seller)of goods?

In addition to keeping the records of a purchase transaction,the accounting department should prepare and mail checks for payment of invoices.

Bryan Company purchased merchandise worth $1,800 on credit,terms n/30.What is the required journal entry to record the transaction under the perpetual inventory system?

Merchandising businesses and servicing companies both need a good system of internal control.