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Exam 5: Accounting for Merchandising Businesses

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Question 31

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In recording the cost of merchandise sold for cash,based on data available from perpetual inventory records,the journal entry is

A) debit Cost of Merchandise Sold;credit Sales
B) debit Cost of Merchandise Sold;credit Merchandise Inventory
C) debit Merchandise Inventory;credit Cost of Merchandise Sold
D) debit Accounts Receivable;credit Merchandise Inventory

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

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Question 32

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Which of the following accounts has a normal credit balance?

A) Sales Returns and Allowances
B) Sales
C) Merchandise Inventory
D) Delivery Expense

E) B) and C)
F) None of the above

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Question 33

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A chart of accounts for a merchandising business

What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

Where are selling and administrative expenses found on the multiple-step income statement?

Freight in is the amount paid by the company to deliver merchandise sold to a customer.

On March 3rd,Blowout Sales makes $3,450.00 in cash sales of general merchandise which have a cost of $1,215.00.Blowout uses a perpetual inventory system. (a)Journalize the sale event. (b)Journal the cost of merchandise sold.

Which of the following accounts will only be found in the chart of accounts of a merchandising company?

Conquest Company uses a perpetual inventory system.Conquest purchased $1,500 of merchandise on account and payment was made within the discount period.The credit terms were 2/10,n/30.Journalize Conquest's purchase and payment.

Merchandise is sold for $3,600,terms FOB destination,2/10,n/30,with prepaid freight costs of $150.If $500 of the merchandise is returned prior to payment and the invoice is paid within the discount period,the amount of the sales discount is $65.

Calculate the gross profit for Jonas Company based on the data given below:

Travis Company purchased merchandise on account from a supplier for $5,700,terms 2/10,net 30.Travis returned $1,100 of the merchandise and received full credit.Travis Company paid for the merchandise within the discount period.

Which of the following accounts should be closed to Income Summary at the end of the fiscal year?

In a perpetual inventory system,when merchandise is returned to the seller, Cost of Merchandise Sold is debited as part of the transaction.

When comparing a retail business to a service business,the financial statement that changes the least is the

Sales to customers who use bank credit cards,such as MasterCard and VISA,are generally treated as credit sales.

What is the normal balance of the following accounts? a.Sales Tax Payable b.Merchandise Inventory c.Delivery Expense d.Cost of Merchandise Sold e.Sales Returns and Allowance f.Sales Discounts g.Sales

Determine the amount to be paid in full settlement of each invoice,assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

Freight-in is considered a cost of purchasing inventory.

During the current year,merchandise is sold for $137,500 cash and $425,600 on account.The cost of the merchandise sold is $322,325.What is the amount of the gross profit?