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Exam 6: Accounting for Merchandising Businesses

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Question 61

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A buyer who acquires merchandise under credit terms of 1/10, n/30 has 30 days after the invoice date to take advantage of the sales discount.

A) True
B) False

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Question 62

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On March 15, Monroe Sales sells $9,525 on account to Garrison Brewer with terms of 2/10, n/30. The cost of merchandise sold was $6,905. (a) Journalize the sale and the recognition of the cost of the sale. (b) On March 20, a $125 credit memo is given to Garrison Brewer due to merchandise that was the wrong color. Journalize this event. The cost of the returned merchandise was $65. (c) On March 25, Garrison Brewer submits payment in full. Journalize this event.

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Question 63

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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 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

Generally, the revenue account for a merchandising business is entitled

Taking advantage of a 2/10, n/30 purchases discount is equal to a yearly savings rate of approximately

The account form of the balance sheet is presented in a downward sequence in three sections.

Which of the following items would not affect the cost of merchandise inventory acquired during the period?

Journalize the entries to record the following selected transactions: (a)Sold $900 of merchandise on account, subject to 7% sales tax. The cost of the merchandise sold was $510. (b)Paid $436 to the state sales tax department for taxes collected.

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

Which of the following accounts usually has a debit balance?

The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a

On March 5, Blowout Sales makes $22,500 in sales on account. The cost of merchandise sold is $16,825. Journalize the sales and recognition of the cost of merchandise sold.

Journalize the following transactions for Evans Company. Assume the company uses a perpetual inventory system. (a)Sold merchandise for $645 cash. The cost of merchandise sold was $375. (b)Sold merchandise for $432 and accepted VISA as the form of payment.The cost of merchandise sold was $195. (c)Sold merchandise on account for $670. The cost of merchandise sold was $438. (d)Paid credit card fees for the month of $85.​​

Using the perpetual inventory system, journalize the entries for the following selected transactions: (a)Sold merchandise on account, for $12,000, terms n/30. The cost of the merchandise sold was $6,500. (b)Sold merchandise to customers who used MasterCard and VISA, $9,500. The cost of the merchandise sold was $5,300. (c)Sold merchandise to customers who used American Express, $2,900. The cost of the merchandise sold was $1,700. (d)Paid an invoice from First National Bank for $385, representing a service fee for processing MasterCard and VISA sales. (e)Paid a $75 processing fee associated with sales made to customers who used American Express.

On March 3, Bluebird Sales makes $4,350 in cash sales of general merchandise that has a cost of $1,512. Bluebird uses a perpetual inventory system. (a) Journalize the sale. (b) Journal the cost of merchandise sold.

A sales invoice included the following information: merchandise price, $12,000; terms 1/10, n/eom, FOB shipping point with prepaid freight of $900 added to the invoice. Assuming that a credit for merchandise returned of $500 is granted prior to payment and the invoice is paid within the discount period, what is the amount of cash that should be received by the seller?

Who is responsible for the freight costs when the terms are FOB shipping point?

Sellers and buyers are required to record trade discounts.

Calculate the gross profit for Jonas Company based on the following data: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 764,000 \\\hline \text { Selling expenses } & 52,500 \\\hline \text { Cost of merchandise sold } & 538,000 \\\hline\end{array}$