Exam 5: The Operating Cycle and Merchandising Operations

Chancellor Company purchased merchandize worth $900 on credit,terms n/30.What is the required journal entry to record the transaction under the periodic inventory system?

The income statement account balances on December 31,2010,for Janice Corporation appear below.In addition,beginning merchandise inventory was $3,000 and ending merchandise inventory was $4,000.Prepare a 2010 income statement for the company. Account Name Balance Sales \ 100,000 Sales Returns and Allowances 1,500 Purchases 50,000 Purchases Returns and Allowances 3,000 Freight-In 5,000 Selling Expense 25,000 General and Administrative Expenses 10,000 Income Taxes Expense 1,800

On August 1,Phillips Industries purchased $12,000 of merchandise on credit.Terms of 1/10,n/30 are extended,and Phillips makes payment on August 9. a. In the journal provided, make Phillips's entries, assuming use of the periodic inventory system. b. Make the entry that would have been made had payment been made on August 17.

Bonding means insuring a company against employee theft.

An effective system of internal control centralizes functions in a single,capable individual.

Ending merchandise inventory is included in the calculation of goods available for sale.

Inventory losses are easier to identify under the perpetual inventory system than under the periodic inventory system.

A consequence of a separation of duties is that

A traditional definition of internal control specifically includes all of the following features except

Feathertouch Company sold merchandize worth $800 on credit,terms n/15.The merchandize sold had cost $550.What is the required journal entry to record the transaction and to transfer the cost of merchandize inventory to cost of goods sold under the periodic inventory system?

A sale on March 21 with terms of n/10 eom is due to be collected by

An effective system of internal control requires that individuals take periodic vacations.

Chancellor Company purchased merchandize worth $900 on credit,terms n/30 and returned merchandize worth $100 on next day.What is the required journal entry to record the merchandize returns under the periodic inventory system?

Internal control is weakened by all of the following except

Merchandising businesses do not need as good a system of internal control as service companies.

Terms of "2/10,n/30" are an example of a trade discount.

A merchandising business will earn an income before income taxes of exactly $0 when

It is unlikely that a company would want to bond its employees who handle cash or inventory.

With the periodic inventory system,goods available for sale must be calculated before cost of goods sold.