Exam 5: Merchandising Operations

When a company uses the perpetual inventory system,there is no need to conduct a physical count of inventory.

Which of the following is shown on a multi-step income statement but not on a single-step income statement?

Knowing the net cost of inventory allows a business to determine the actual cost of the merchandise purchased.

An adjusted trial balance for a sole proprietorship is given below.There were no new capital contributions during the year. Debit Credit Cash \ 14,000 Accounts Receivable 5,000 Prepaid Rent 800 Merchandise Inventory 26,000 Accounts Payable \ 4,200 Salaries Payable 1,500 Notes Payable 600 Lorenzo, Capital 8,000 Lorenzo, Withdrawals 1,000 Sales Revenue 98,500 Cost of Goods Sold 23,000 Salaries Expense 19,000 Rent Expense 15,000 Selling Expense 8,400 Supplies Expense Total \ 112,800 \ 112,800 What will be the final balance in the company's Lorenzo,Capital account after recording the closing Entries?

Briefly discuss what gross profit represents and how it affects the net earnings of a merchandiser.

Gross profit percentage reflects a business's ability to raise selling prices.

Revenue from contracts with multiple performance obligations is recognized as each performance obligation is satisfied.

A company sold merchandise with a cost of $217 for $390 on account.The seller uses the perpetual inventory system.The entry to record the cost of merchandise sold would include ________.

A merchandiser purchased inventory on account for $17,000.In a periodic inventory system,the journal entry to record the purchase would include ________.

Journalize the following sales transactions for Bryson Printing Equipment using the periodic inventory system.Explanations are not required. March 2: Bryson sold $45,800 of printing equipment on account,credit terms n/30. March 5: Bryson received a $2,500 sales return of damaged goods from the customer. March 11: Bryson received payment from the customer of the amount due.

There is a discount on freight in,thus purchase discounts are computed on transportation costs.

When a company that uses the perpetual inventory system sells goods for cash,the journal entry to record cost of goods sold is:

Under the perpetual inventory system,purchase returns or allowances are debited to the Merchandise Inventory account by the purchaser.

On a multi-step income statement,merchandisers report operating expenses in two categories-selling expenses and administrative expenses.

Complete the following table to show how FOB terms apply to merchandise inventory purchased by a merchandiser. FOB Term When does the title to the goods transfer to the buyer? Who pays the freight? Shipping Point Destination

Bargain Merchandisers has the following transactions for the month of July. Net Sales Revenue \ 403,000 Cost of Goods Sold 310,000 Operating Expenses 85,000 Interest Revenue 7,000 Calculate Gross Profit.

Describe how the cost of goods sold is calculated when using the periodic inventory system.

The following transactions apply to a company that uses a periodic inventory system.For each transaction,state which accounts are used and whether the account is debited or credited.All transactions involve the purchase of inventory.

When a perpetual inventory system is used,at the time of each sale an entry to record an expense and an increase in Merchandise Inventory must be made.

What does the gross profit percentage measure? How is it computed?