Exam 5: Merchandising Operations

A company using the perpetual inventory system purchased inventory worth $550,000 on account with credit terms of 2/15,n/45.Defective inventory of $60,000 was returned 3 days later,and the accounts were appropriately adjusted.If the company paid the invoice 20 days later,the journal entry to record the payment would be ________.

Under the perpetual inventory system,when a seller grants a sales allowance ________.

For each of the following statements,state whether it applies to a periodic inventory system (periodic)or a perpetual inventory system (perpetual). Statement Periodic or Perpetual Merchandise inventory and purchasing systems are integrated with the records for Accounts Receivable and Sales Revenue. This system is often used by restaurants and small retail stores. The physical count captures inventory transactions that are not recorded by the electronic system.

Under IFRS,Cost of Goods Sold represents a functional expense which explains the purpose of the cost incurred.

A company purchased inventory for $4,000 from a vendor on account,FOB shipping point,with terms of 2/15,n/30.The company paid $200 cash for freight in.The entry to record the payment of the invoice within 15 days of the invoice date by the purchaser would include ________.(Assume a perpetual inventory system.)

Centennial Company sold goods on credit terms n/20 to Harper Company.This means no discounts are offered,and the amount of the invoice is due 20 days after the invoice date.

In a perpetual inventory system,the physical count of inventory ________,

A company has purchased inventory and received an invoice that requires the buyer to pay the transportation costs for delivering the merchandise.The terms are ________.

Journalize the following transactions for Park Gift Shop.Explanations are not required.Park uses a perpetual inventory system. Mar.5: Purchased $4,400 of merchandise inventory on account,3/10,n/EOM and FOB shipping point. Mar.9: Returned $700 of defective merchandise purchased on March 5. Mar.11: Paid the freight bill of $250 on the March 5 purchase. Mar. 12: Sold merchardise irventory on account for $\$ 5,200,2 / 15 , r / 30$ . These goods cost the corripary $\$ 3,700$ . Mar.14: Paid amount owed on credit purchase of March 5,less the return and the discount. Mar.30: Received cash from the March 12 customer in full settlement of the debt.

Gross profit is calculated as ________.

Freight out is an addition to the Merchandise Inventory account if the seller uses the perpetual inventory system.

Which of the following is the correct formula for calculating gross profit percentage?

The perpetual inventory system keeps a running computerized record of inventory and cost of goods sold.

Maddy's Gifts received an allowance from the vendor for an amount of $400.Prepare the journal entry for this transaction.Maddy's uses a perpetual inventory system and purchased the goods on account.Omit explanation.

Under which of the following terms will the buyer be required to pay transportation costs?

A company purchased inventory for $2,200 on account,and recorded the following journal entry: Merchandise Inventory 2,200 Accounts Payable 2,200 The vendor's invoice showed terms of 3/10,n/30.Prepare the journal entry for the purchaser for the payment of the invoice 17 days after the invoice date.Omit explanation.

The Estimated Returns Inventory account ________.

A purchase discount is the amount offered to the purchaser for delaying the payment to the seller.

On a multi-step income statement,which of the following is added to operating income to arrive at net income?

In general,to remain competitive in an industry,a low gross profit percentage is desired.