Exam 5: Merchandising Operations

Freight in is recorded in the Merchandise Inventory account if the purchaser uses the perpetual inventory system.

Neighborhood Lawn Equipment uses a perpetual inventory system.Journalize the following sales transactions for this company.Explanations are not required. May 18: Sold $26,000 of merchandise on account,credit terms are 1/10,n/30,FOB destination.Cost of goods is $15,600. May 22: Neighborhood negotiated a $600 allowance on the goods sold on May 18. May 24: Neighborhood paid freight of $450 on the goods sold on May 18.

Both wholesalers and retailers are merchandisers.

A company purchased inventory for $2,000 from a vendor on account,FOB shipping point,with terms of 3/10,n/30.The company paid the shipper $300 cash for freight in.The company then returned damaged goods worth $400.The invoice was then paid eight days after the invoice date.Assuming that there was no beginning inventory balance,the cost of inventory would be ________.(Assume a perpetual inventory system.)

The balance sheet of a merchandiser looks the same as the balance sheet of a retailer,except merchandisers have the following additional current liability accounts: Estimated Returns Inventory and Refunds Payable.

Regarding the four-step closing process under the periodic inventory system,________.

Purchase discounts are calculated on the amount of the merchandise purchased including freight costs.

The trial balance for a merchandiser,before the journal entries below,is as follows.A physical count of inventory at the end of the accounting year reveals $28,000 of inventory on hand.(Assume a perpetual inventory system.) Debit Credit Cash \ 12,600 Accounts Receivable 2,400 Prepaid Rent 800 Merchandise Inventory 30,000 Accounts Payable \ 4,200 Salaries Payable 1,000 Notes Payable 800 Yung, Capital 13,800 Yung, Withdrawals 1,000 Sales Revenue 96,000 Cost of Goods Sold 23,000 Delivery Expense 2,000 Salaries Expense 21,000 Rent Expense 14,000 Selling Expense 8,500 Supplies Expense Total \ 115,800 \ 115,800 Prepare the journal entry to record the inventory shrinkage and prepare all closing entries.Omit explanations.

A merchandiser sold goods on account to Customer A for $8,000 with terms of 2/10,n/30.If the payment is received after the discount period,Accounts Receivable is decreased by $8,000.

Which of the following entries would be made to record the purchase of inventory on account,if a company uses the perpetual inventory system?

The Merchandise Inventory account is an expense account that is used only for goods purchased that the business owns and intends to resell to customers.

Cost of goods available for sale represents beginning merchandise inventory plus net purchases less freight in.

The purchase discount amount is calculated on the amount of the invoice minus the returns and allowances.

An adjusted trial balance for a merchandiser is given below. Prepare the journal entry to close the revenue and other income accounts.Omit explanation.

Complete Electronics Company sells a point-of-sale computer with a two-year service contract.Complete collects $2,000 cash for the selling price of the computer and $504 for the two-year service contract.How is revenue recognized?

On the income statement,a service company reports the cost of merchandise inventory that has been sold to customers.

An adjusted trial balance of Meadows Company as of December 31,2019 is given below.Prepare a multi-step income statement for the year for the company. Debit Credit Cash \ 15,000 Accounts Receivable 42,000 Merchandise Inventory 60,000 Supplies 15,000 Land 300,000 Accounts Payable \ 3,000 Notes Payable 25,000 Meadows, Capital 326,000 Meadows, Withdrawals 3,000 Sales Revenue 465,000 Cost of Goods Sold 240,000 Salaries Expense 15,000 Utilities Expense 69,000 Rent Expense 54,000 Interest Expense Totals \ 819,000 \ 819,000

Expenses that fall outside the regular operations of a business are ________.

An amount that a business earns from selling merchandise inventory is known as sales revenue or sales.

FOB destination refers to a situation where title to goods while in transit belongs to the ________.