Exam 6: Merchandising Operations and the Multi-Step Income Statement

The Tuck Shop began the current month with inventory costing $10,000,then purchased inventory at a cost of $35,000.The perpetual inventory system indicates that inventory costing $30,000 was sold during the month for $40,000.If an inventory count shows that inventory costing $14,500 is actually on hand at month-end,what amount of shrinkage occurred during the month?

When using the perpetual inventory system,all inventory transactions are recorded to the Inventory account so to maintain an up-to-date balance.

Gross margin is net sales minus cost of goods sold.

A company starts the period with 100 computers in inventory,purchases 30 more,returns 4 of them to suppliers,and has 83 in inventory at the end of the period.Which of the following statements is true?

On January 1,2018,the CD Warehouse began operations with a cash balance of $67,328.During the year,the company purchased 14,500 CDs on credit at a unit cost of $12.Payment was made soon enough to obtain a 2% purchase discount.During the year the company sold 3,200 CDs at a unit sales price of $25.1,000 of CD sales were sold to customers who paid early to get the 3% discount. Assuming a perpetual inventory system is used,show the journal entries for these transactions and the T-accounts for both cash and inventory. Irventory 174,000 Accourts Payable 174,000 Accounts Payable 174,000 Cash 170,520 Irventory 3,480 Cash 79,250 Sales Discourt 750 Sales Reverue 80,000 Sales =@\ 25=\ 80,000 Cost of Goods Sold 37,632 Irventory 37,632 Unit Cost of Irvertory =\ 170,520/14,500=\ 11.76 3,200\times\ 11.76=\ 37,632

A credit card discount is applied to a sales transaction.

A buyer using a perpetual inventory system uses an account named Purchases Returns and Allowances to record any goods returns to a supplier.

If a company achieves a small increase in its gross profit percentage from one year to the next,the company:

A store holding a "25% off" sale will probably hope that the lower gross profit percentage will be offset by higher sales.

In a perpetual inventory system,when a company purchases merchandise the journal entry includes a debit to Inventory.

The Sales Returns and Allowances account balance should be reported as a reduction of Sales account balance because it is a contra revenue account.

Your store buys ice cream for $1.50 a half litre (not including general and administrative expenses of $0.75)and sells it for $4 a half litre.Which of the following statements is true?

The company purchases $3000 of goods intending to sell them to customers.

On June 15,a retailer purchases merchandise on account from a supplier for $2,000 terms 3/10,n/30.On June 18,the retailer returns merchandise purchased for $600 for a reduction in the amount owing.On June 22,the retailer pays their account.Under a perpetual inventory system the journal entry to record the payment includes:

The gross profit percentage is computed by dividing operating income by net sales.

The largest source of shrinkage in the retail industry is probably:

The company pays a shipping firm $685 to ship an order of goods from the supplier to the company.

On December 31,2017,you count 300 tie clips in inventory.During the next quarter,you carefully record the effect of each purchase and sale transaction on inventory.You buy 128 tie clips during the next quarter.On March 31,2018,you count 288 tie clips in inventory.Which of the following is true?

Under the periodic inventory system: