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Exam 5: Accounting for Merchandising Businesses

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Question 41

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Which of the following items would not​​ affect the cost of inventory purchased during the period?

A) quantity discounts
B) sales discounts
C) freight in
D) sales commissions

E) C) and D)
F) B) and D)

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Question 42

Multiple Choice

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​Emma Co.sold to Isabella Co.merchandise on account FOB shipping point,2 / 10,net 30,for $15,000.Emma Co.prepaid the $750 shipping charge.Using the perpetual inventory method,which of the following entries will Isabella Co.make to record the payment for the merchandise if Isabella Co.pays within the discount period?

A) Accounts Payable-Emma Co.,debit $15,000; Cash,credit $15,000
B) Accounts Payable-Emma Co.,debit $15,450; Cash,credit $15,450
C) Accounts Payable-Emma Co.,debit $15,000; Freight In,debit $750; Cash,credit $15,750
D) Accounts Payable-Emma Co.,debit $15,750; Inventory,debit $300; Cash,credit $16,050

E) A) and C)
F) B) and C)

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Question 43

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The entry to record the return of merchandise from a customer would include a

The seller may prepay the freight costs even though the terms are FOB shipping point.

If payment is due by the end of the month in which the sale is made,the invoice terms are expressed as n / 30.

Merchandise is sold for $3,600,terms FOB destination,2 / 10,n / 30,with prepaid freight costs of $150.The sales amount recorded is $3,528.

Inventory shrinkage is recorded when

Purchases of merchandise are typically credited to the inventory account under the perpetual inventory system.

A sales discount encourages customers to pay accounts more quickly than if a discount were not available.

Which of the following accounts would be included in the chart of accounts of a merchandising company using the (a)periodic inventory system,(b)perpetual inventory system,or (c)both systems? ​ (1)Purchases (2)Inventory (3)Sales (4)Purchases Discounts (5)Cost of Goods Sold (6)Freight In (7)Delivery Expense

Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000.The retailer receives a 30% trade discount and credit terms of 2 / 10,n / 30.What amount should Norfolk debit to the Inventory account?

Journalize the following transactions for Armour Inc.using both the periodic inventory system and the perpetual inventory system,presented in the side-by-side format of the form provided below. Oct.7 Sold $1,200 of merchandise on credit to Rondo Distributors,terms n / 30; the cost of the merchandise was $720. Oct.8 Purchased merchandise,$10,000; terms FOB shipping point and 2 / 15,n / 30; with prepaid freight charges of $525 added to the invoice.

The journal entry to record the receipt of inventory purchased for cash in a perpetual inventory system would be

Merchandise is sold for cash.The selling price of the merchandise is $6,000 and the sale is subject to a 7% state sales tax.The journal entry to record the sale would include a credit to

Journalize the following merchandise transactions.The company uses the perpetual inventory system.

The primary difference between the periodic and perpetual inventory systems is that a

If the physical count of inventory revealed $158,000 of inventory on hand and the inventory records reported $163,000,what would be the necessary adjusting entry to record inventory shrinkage?

Under the perpetual inventory system,when a sale is made,both the sale and cost of goods sold are recorded.

Under a perpetual inventory system

Who is responsible for the freight cost when the terms are FOB destination?