Question 1

What is the gross margin ratio? How is it used as an indicator of profitability?

Accepted Answer

The gross margin ratio computes the rela

Question 2

Morgan, Inc. uses a perpetual inventory system and the net method of recording purchases. On May 12, a merchandise purchase of $15,000 was made on credit, 2/10, n/30. The journal entry to record this purchase is:

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 3

Garza Company made a $135,000 sale with terms 2/10, n/45: If the company uses the gross method of accounting for sales, the sale should be recorded with a debit to Accounts Receivable and a credit to Sales for which of the following amounts?

Accepted Answer

A) $135,000. 
B) $132,300. 
C) $137,700. 
D) $121,500. 
E) $148,500. 
A) $135,000. 
B) $132,300. 
C) $137,700. 
D) $121,500. 
E) $148,500.

Question 4

On July 1, Ferguson Company, Inc. sold merchandise in the amount of $3,700 to Tracey Company, with credit terms of 2/10, n/30. The cost of the items sold is $2,000. Ferguson uses the gross method of accounting for sales and a perpetual inventory system. On July 5, Tracey returns some of the merchandise. The selling price of the merchandise returned is $500 and the cost of the merchandise returned is $350. The entry or entries that Ferguson must make on July 5 to record the return is:

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 5

A company has sales of $375,000 and its gross profit is $157,500. Its cost of goods sold equals:

Accepted Answer

A) $(217,000). 
B) $375,000. 
C) $157,500. 
D) $217,500. 
E) $532,500. 
A) $(217,000). 
B) $375,000. 
C) $157,500. 
D) $217,500. 
E) $532,500.

Question 6

Juniper Company, Inc. uses a perpetual inventory system. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The amount of the cash paid on August 16 equals:

Accepted Answer

A) $8,167.50. 
B) $9,652.50. 
C) $9,750.00. 
D) $8,250.00. 
E) $8,152.50. 
A) $8,167.50. 
B) $9,652.50. 
C) $9,750.00. 
D) $8,250.00. 
E) $8,152.50.

Question 7

Calculate the gross margin ratio for each of the following separate cases A through C:

Accepted Answer

A = ($145,000 - $83,600)/$145,

Question 8

A company's net sales are $775,420, its costs of goods sold are $413,890, and its net income is $117,220. Its gross margin ratio equals:

Accepted Answer

A) 46.6%. 
B) 53.4%. 
C) 28.3%. 
D) 31.5%. 
E) 40.5%. 
A) 46.6%. 
B) 53.4%. 
C) 28.3%. 
D) 31.5%. 
E) 40.5%.

Question 9

Merchandise inventory is reported in the long-term assets section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

A company had a gross profit of $300,000 based on sales of $400,000. Its cost of goods sold equals $700,000.

Accepted Answer

A) True 
 B)False

Question 11

A period's ending Merchandise Inventory account balance is the next period's beginning Merchandise Inventory balance.

Accepted Answer

A) True 
 B)False

Question 12

____________________ can benefit a seller by decreasing the delay in receiving cash and reducing future collection efforts.

Accepted Answer

The answer of ____________________ can benefit a seller by decreasing...

Question 13

Jasper Company, Inc. is a wholesaler that buys merchandise in large quantities. Its supplier's catalog indicates a list price of $500 per unit on merchandise Jasper intends to purchase, and the supplier offers a 30% trade discount for large quantity purchases. The cost of shipping the merchandise is $7 per unit. Jasper's net purchase price per unit will be:

Accepted Answer

A) $507 
B) $350 
C) $357 
D) $343 
E) $493 
A) $507 
B) $350 
C) $357 
D) $343 
E) $493

Question 14

If a company sells merchandise with credit terms 2/10 n/60, the credit period is 10 days and the discount period is 60 days.

Accepted Answer

A) True 
 B)False

Question 15

Under both the periodic and perpetual inventory systems, the temporary account Purchases Returns and Allowances is used to accumulate the cost of all returns and allowances for a period.

Accepted Answer

A) True 
 B)False

Question 16

Describe the difference between wholesalers and retailers.

Accepted Answer

A wholesaler is an intermediary that buy

Question 17

On September 12, Jepson Company purchased merchandise in the amount of $5,800 from Vander Company, Inc. on credit with terms of 2/10, n/30. Jepson uses the gross method of accounting for purchases and a periodic inventory system. Jepson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Jepson makes on September 18 is:

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 18

Forrest's Cycle Shop, Inc. uses the gross method of accounting for sales and a perpetual inventory accounting system and had the following transactions during the month of July:   Prepare the required journal entries that Forrest's Cycle Shop, Inc. must make to record these transactions.

Accepted Answer

The answer of Forrest's Cycle Shop, Inc. uses the gross...

Question 19

Merchandise inventory:

Accepted Answer

A) Is a long-term asset. 
B) Is a current asset. 
C) Includes supplies the company will use in future periods. 
D) Is classified with investments on the balance sheet. 
E) Must be sold within one month. 
A) Is a long-term asset. 
B) Is a current asset. 
C) Includes supplies the company will use in future periods. 
D) Is classified with investments on the balance sheet. 
E) Must be sold within one month.

Question 20

Purchase returns refer to merchandise a buyer acquires but then returns to the seller.

Accepted Answer

A) True 
 B)False

What is the gross margin ratio? How is it used as an indicator of profitability?

Morgan, Inc. uses a perpetual inventory system and the net method of recording purchases. On May 12, a merchandise purchase of $15,000 was made on credit, 2/10, n/30. The journal entry to record this purchase is:

Garza Company made a $135,000 sale with terms 2/10, n/45: If the company uses the gross method of accounting for sales, the sale should be recorded with a debit to Accounts Receivable and a credit to Sales for which of the following amounts?

A company has sales of $375,000 and its gross profit is $157,500. Its cost of goods sold equals:

Juniper Company, Inc. uses a perpetual inventory system. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The amount of the cash paid on August 16 equals:

Calculate the gross margin ratio for each of the following separate cases A through C:

A company's net sales are $775,420, its costs of goods sold are $413,890, and its net income is $117,220. Its gross margin ratio equals:

Merchandise inventory is reported in the long-term assets section of the balance sheet.

A company had a gross profit of $300,000 based on sales of $400,000. Its cost of goods sold equals $700,000.

A period's ending Merchandise Inventory account balance is the next period's beginning Merchandise Inventory balance.

____________________ can benefit a seller by decreasing the delay in receiving cash and reducing future collection efforts.

If a company sells merchandise with credit terms 2/10 n/60, the credit period is 10 days and the discount period is 60 days.

Under both the periodic and perpetual inventory systems, the temporary account Purchases Returns and Allowances is used to accumulate the cost of all returns and allowances for a period.

Describe the difference between wholesalers and retailers.

Forrest's Cycle Shop, Inc. uses the gross method of accounting for sales and a perpetual inventory accounting system and had the following transactions during the month of July: Prepare the required journal entries that Forrest's Cycle Shop, Inc. must make to record these transactions.

Merchandise inventory:

Purchase returns refer to merchandise a buyer acquires but then returns to the seller.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

Exam 4: Reporting and Analyzing Merchandising Operations

What is the gross margin ratio? How is it used as an indicator of profitability?

Morgan, Inc. uses a perpetual inventory system and the net method of recording purchases. On May 12, a merchandise purchase of $15,000 was made on credit, 2/10, n/30. The journal entry to record this purchase is:

Garza Company made a $135,000 sale with terms 2/10, n/45: If the company uses the gross method of accounting for sales, the sale should be recorded with a debit to Accounts Receivable and a credit to Sales for which of the following amounts?

A company has sales of $375,000 and its gross profit is $157,500. Its cost of goods sold equals:

Juniper Company, Inc. uses a perpetual inventory system. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The amount of the cash paid on August 16 equals:

Calculate the gross margin ratio for each of the following separate cases A through C:

A company's net sales are $775,420, its costs of goods sold are $413,890, and its net income is $117,220. Its gross margin ratio equals:

Merchandise inventory is reported in the long-term assets section of the balance sheet.

A company had a gross profit of $300,000 based on sales of $400,000. Its cost of goods sold equals $700,000.

A period's ending Merchandise Inventory account balance is the next period's beginning Merchandise Inventory balance.

____________________ can benefit a seller by decreasing the delay in receiving cash and reducing future collection efforts.

If a company sells merchandise with credit terms 2/10 n/60, the credit period is 10 days and the discount period is 60 days.

Under both the periodic and perpetual inventory systems, the temporary account Purchases Returns and Allowances is used to accumulate the cost of all returns and allowances for a period.

Describe the difference between wholesalers and retailers.

Forrest's Cycle Shop, Inc. uses the gross method of accounting for sales and a perpetual inventory accounting system and had the following transactions during the month of July: Prepare the required journal entries that Forrest's Cycle Shop, Inc. must make to record these transactions.

Merchandise inventory:

Purchase returns refer to merchandise a buyer acquires but then returns to the seller.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters