Exam 5: Accounting for Merchandising Operations

The following information is for Trico and its competitor Unico. Required: 1. Calculate the dollar amount of gross margin and the gross margin ratio to the nearest percent, for each company for both years. 2. Which company had the more favorable ratio for each year? 3. Which company had the more favorable change in the gross margin ratio over this 2-year period?

The acid-test ratio:

A company uses the perpetual inventory system and recorded the following entry This entry reflects a:

A merchandising company:

Describe the recording process (including costs) for sales of merchandise inventory using a perpetual inventory system.

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

In a perpetual inventory system, the merchandise inventory account must be closed at the end of the accounting period.

The year-end adjusted trial balance of ABC Supply for the current year, is shown below: Prepare Closing entries at December 31 for the current year.

Gross profit is also called gross margin.

From the adjusted trial balance for Worker Products Company given below, prepare the necessary closing entries.

Merchandise inventory consists of products that a company acquires to resell to customers.

Neutron uses a periodic inventory system. Prepare general journal entries to record the following transactions for Neutron:

Selling expenses support a company's overall operations and include expenses related to accounting, human resource management, and financial management.

The following statements are regarding the operating cycle of a merchandising company except:

The credit terms 2/10, n/30 are interpreted as:

Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year:

The quick assets are defined as:

A company had sales and cost of goods sold of $350,000 and $200,000, respectively. Its gross profit equals $150,000.

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

________________________ refers to products that a company owns and intends to sell.