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Exam 5: Merchandising Operations

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Question 21

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Landon Jewelers uses the perpetual inventory system.On April 2,Landon sold merchandise with a cost of $3,500 for $8,000 to a customer on account with terms of 1/15,n/30.The journal entry to record the cost of goods sold would be:

A) $\begin{array} { | c | r | r | } \hline \text { Cost of Goods Sold } & 3,500 & \\\hline \text { Accounts Receivable } & & 3,500 \\\hline\end{array}$
B) $\begin{array} { | c | r | r | } \hline \text { Sales Revenue } & 3,500 & \\\hline \text { Cost of Goods Sold } & & 3,500 \\\hline\end{array}$
C) $\begin{array} { | c | r | r | } \hline \text { Cost of Goods Sold } & 3,500 & \\\hline \text { Merchandise Inventory } & & 3,500 \\\hline\end{array}$
D) $\begin{array} { | c | r | r | } \hline \text { Merchandise Inventory } & 3,500 & \\\hline \text { Cost of Goods Sold } & & 3,500 \\\hline\end{array}$

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Question 22

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When preparing the worksheet for a merchandising business using the perpetual inventory system,which of the following is not a new merchandising account that is shown on the worksheet?

A) Accumulated Depreciation - Building
B) Sales Returns and Allowances
C) Cost of Goods Sold
D) Merchandise Inventory

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Question 23

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Credit terms of a merchandising company are 1/15,net 40.This means that the buyer can receive a discount of 1% if the invoice is paid within 40 days of the invoice date.

Freight in is recorded in the Merchandise Inventory account if the purchaser uses the perpetual inventory system.

Net sales revenue is equal to sales revenue less cost of goods sold.

A company has purchased inventory and received an invoice that requires the buyer to pay the transportation costs for delivering the merchandise.The terms are ________.

On January 21,2016,Bessant,Inc.received merchandise from Mullies,Inc.On that date,it found a few of these goods to be damaged.On January 22,it returned the damaged goods to the seller.Such returns will be treated as ________ by Bessant.

Best Value,Inc.started its operations on January 1,2017.It engages in buying and selling different types of electronic gadgets.The first step in its operating cycle would be to ________.

________ are the expenses that occur in an entity's major line of business.

In a multi-step income statement,interest revenue and interest expense are included in operating income.

An invoice,with payment terms of 2/10,n/30,was issued on April 28 for $235.00.If the payment was made on May 12,the amount of payment will be ________.(Round your answer to the nearest cent. )

Complete the following table to show how FOB terms apply to merchandise inventory purchased by a merchandiser. $\begin{array} { | l | l | l | } \hline \text { FOB Term } & \begin{array} { l } \text { When does the title to the goods } \\\text { transfer to the buyer? }\end{array} & \\\text { Shipping Point } & & \text { Who pays the freight? } \\\hline \text { Destination } & & \\\hline\end{array}$

In a periodic inventory system,the Cost of Goods Sold account is continuously updated as and when sales occur.

Journalize the following transaction for a merchandiser that uses the perpetual inventory system. Received returned goods from a customer,$1,000 (cost,$740).

Journalize the following purchase transactions for Schaeffer Office Supplies using the periodic inventory system.Explanations are not required. $\begin{array} { | l | l | } \hline \text { May } 12 & \begin{array} { l } \text { Schaeffer buys } \$ 167,500 \text { worth of merchandise inventory } \\\text { on account with credit terms of } 2 / 10 , \mathrm { n } / 30 .\end{array} \\\hline \text { May } 16 & \begin{array} { l } \text { Schaeffer returns } \$ 18,600 \text { of the merchandise to the } \\\text { vendor due to damage during shipment. }\end{array} \\\hline \text { May } 21 & \text { Schaeffer pays the amount due. } \\\hline\end{array}$

A company sold merchandise for $1,000 on account with terms of 2/15,n/30.The company uses a perpetual inventory system.Defective merchandise of $200 was returned two days later.If the payment was received after 30 days,the journal entry to record the cash receipt will include ________.

G-mart,a small-scale grocer,wants to introduce an inventory system to track its inventory.G-mart does not currently use optical scanning registers and computer systems.The perpetual inventory system is most suitable for its operations.

Under the perpetual inventory system,the journal entry to record the freight paid by the seller on goods sold is:

Using the periodic inventory system,state which accounts are used and whether the account is debited or credited.All transactions involve the purchase of inventory.

A company sold merchandise for $23,000 on account with terms of 3/15,n/30.The company uses a perpetual inventory system.After two days,it received defective merchandise worth $2,000.The journal entry to record the cash receipt for the sale if the payment is received within 10 days of the invoice date would include ________.