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Exam 4: Accounting for Merchandising Operations

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Question 31

True/False

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Sales Discounts, Sales Returns and Allowances and Cost of Goods Sold are all closed to the Income Summary account with debits.

A) True
B) False

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Question 32

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The periodic inventory system requires updating the inventory account only at the end of the period to reflect the quantity and cost of both the goods available and the goods sold.

A) True
B) False

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Question 33

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A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

A wholesaler is an intermediary that buys products from manufacturers or other wholesalers and sells them to consumers.

The agreement regarding the amounts and timing of payment from a buyer to a seller are the ____________________.

Beginning inventory plus the net cost of purchases is the _____________________.

If goods are shipped FOB shipping point, the seller does not record revenue from the sale until the goods arrive at their destination because the transaction is not complete until that point.

A company's cost of goods sold was $4,000. Determine net purchases and ending inventory given goods available for sale were $11,000 and beginning inventory was $5,000.

A company reported the following information for the month of November: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 50,475 \\\hline \text { Sales discounts } & 235 \\\hline \text { Sales returns and allowances } & 2,840 \\\hline \text { Cost of goods sold } & 33,975 \\\hline\end{array}$ Required: Calculate this company's gross margin ratio.

When preparing an unadjusted trial balance using a periodic inventory system, the amount shown for Merchandise Inventory is:

Trade discounts are recorded in a Trade Discounts account in the accounting system.

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

Credit terms include the specifics regarding the amount owed and timing of payments from a buyer to a seller.

A company uses the perpetual inventory system and recorded the following entry: $\begin{array} { | l | r | r | } \hline \text { Accounts Payable } & 2,500 & \\\hline \text { Merchandise Inventory } & & 50 \\\hline \text { Cash } & & 2,450 \\\hline\end{array}$ This entry reflects a:

J.C. Penny had net sales of $28,496 million, its cost of goods sold was $19,092 million and its net income was $997 million. Its gross margin ratio equals:

Scuba Company had net income on the current year's income statement in the amount of $800,000, other expense in the amount of $400,000 and a gross profit ratio of 58%, what was the amount of net sales on the income statement?

Why does Selena and Khary Cuffe's company, Heritage Link Brands, use a perpetual inventory system?

A company has the following accounts. What is the acid test ratio?

Purchase allowances refer to merchandise a buyer acquires but then returns to the seller.

A company has sales of $1,500,000, sales discounts of $102,000, sales returns and allowances of $123,000, shipping charges of $15,000, sales commissions of $34,000,net income totaled $263,500, and cost of goods sold of $420,000. What is the gross profit/margin ratio?