Exam 5: Merchandising Operations

Auto Parts Company uses a periodic inventory system.Use the following details to calculate net purchases. Beginning merchandise inventory \ 3,000 Ending merchandise inventory 2,200 Purchases 24,000 Purchase Discounts 800 Purchase Returns and Allowances 1,500 Freight In 4,000

For the year ended December 31,2019,Davidson Mart had sales of $800,000 and cost of goods sold of $600,000.Davidson estimates that approximately 2% of the merchandise sold will be returned.The adjusting journal entry on December 31,2019,would include a ________.

Smithville Furniture sold 15 desks,with a cost of $7,500,for $11,250 on account.Smithville uses the periodic inventory system.Which of the following is the correct way to record this transaction?

For each of the following accounts,state type of account and the normal account balance.Assume a periodic inventory system. Account Title Type of Account Normal Account Balance Purchase Returns and Allowances Merchandise Inventory Purchases

The net cost of merchandise inventory purchased ________.

If purchase allowances are granted,the buyer need not return the goods to the seller.

List,and briefly discuss,two differences between the income statement of a service company and the income statement of a merchandise company.

When a company uses a perpetual inventory system,all merchandise transactions are updated as they occur.However,the inventory account may not show the correct balance at all times.

Gross profit represents the mark-up on ________.

On January 21,2019,Cressent Company received merchandise from Neptune Company.On that date,Cressent found a few of these goods to be damaged.On January 22,Cressent returned the damaged goods to the seller.Such returns will be treated as ________ by Cressent.

When a customer returns goods to the seller,the seller needs to debit Estimated Returns Inventory.The seller uses the perpetual inventory system.

Bridgeport Enterprises reported the following figures from its adjusted trial balance for its first year of business,which ended on June 30,2019. Accounts Payable \ 4,800 Accounts Receivable 3,600 Accrued Liabilities 1,400 Administrative Expenses 3,800 Bridgeport, Capital 7,550 Bridgeport, Withdrawals 2,000 Cash 4,500 Cost of Goods Sold 23,500 Equipment, net 8,500 Interest Expense 150 Merchandise Inventory 2,500 Net Sales Revenue 35,000 Notes Payable, Long-term 1,500 Selling Expenses 1,700 Requirements: a.Prepare a multi-step income statement. b.Prepare the statement of owner's equity.The owner contributed $7,550 cash to the business during the first year of operations. c.Prepare a classified balance sheet. d.Compute the gross profit percentage.

The financial statements under the periodic inventory system and the perpetual inventory system are the same.

Even in a perpetual inventory system,the business must count its inventory at least once in a year.

A modern perpetual inventory system ________.

What does "2/10" mean,with respect to "credit terms of 2/10,n/30"?

In a perpetual inventory system,the Cost of Goods Sold account is debited at the time of each sale.

A company using the perpetual inventory system purchased merchandise on account for $5,000.Give the journal entry to record this transaction.Omit explanation.

Under the new revenue recognition standards,companies are required to identify the performance obligations associated with each contract.

The operating cycle of a merchandiser begins when the company purchases inventory from a vendor and ends when the company then sells the inventory to a customer.