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Exam 5: Merchandising Operations

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Question 21

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The Income Summary account has a credit balance of $25,000 after the revenue and expense accounts have been closed. Which of the following is to be credited to close the Income Summary account?

A) Owner's Name, Withdrawals
B) Sales Revenue
C) Cost of Goods Sold
D) Owner's Name, Capital

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Question 22

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A merchandiser, following the perpetual inventory system, has the following transactions during August, 2015: Credit terms of invoice are 2/15, n/45. Give journal entries for the above transactions.

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Question 23

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A single-step income statement shows subtotals for gross profit and operating income.

A company using the perpetual inventory system, purchased merchandise on account for $5,000. Give journal entry to record the same.

Michelin Jewelers uses the perpetual inventory system. On April 2, Michelin sold merchandise with a cost of $5,500 for $9,000 to a customer on account with terms of 3/15, n/30. On April 4, the customer reported damaged goods and Michelin granted a $1,000 sales allowance. On April 10, Michelin received payment from the customer. Calculate the amount of net sales revenue.

A company sold merchandise worth $221 for $350 on account. The seller uses the perpetual inventory system. The entry to record the cost of merchandise sold would include:

A company sold merchandise for $1,000 on account with terms of 2/10, n/30. The company uses a perpetual inventory system. Defective merchandise of $200 was returned 2 days later. If the payment was received after 20 days, the journal entry to record the cash receipt will include:

When a company uses a perpetual inventory system, all merchandise transactions are updated as and when they occur; so, the inventory account will show the current balance at all times.

Under the perpetual inventory system, the journal entries to record sales returns(the original sale was on account) would be:

A company that uses the perpetual inventory system purchases inventory for $65,000 on account, with terms of 2/10, n/30. Which of the following is the journal entry to record the payment made within 10 days?

Credit terms of 2/10, n/30 indicate that a discount of 2% will be given if payment is made within 10 days of the invoice date. Otherwise, the total invoice amount is due within 30 days after the invoice date.

Which of the following is the correct order of subtotals that appear on a multi-step income statement?

The terms of an invoice are 3/10, n/25. This means that a:

Which of the following is the correct formula for calculating gross profit percentage?

A company purchased inventory for $2,200 on account, and recorded the following journal entry: The vendor's invoice showed terms of 3/10, n/30. Give the journal entry for the payment of the invoice seventeen days after the invoice date.

An invoice is a request by the seller for payment from the purchaser.

Reid Art Supply Company uses a perpetual inventory system. The company had the following transactions during August, 2015:

The Gajet Store Inc. started its operations on January 1, 2015. It engages in buying and selling different types of electronic gadgets. The first step in its operating cycle would be to:

The trial balance of a merchandiser is as follows. A physical count of inventory at the end of the accounting year reveals $28,000 of inventory on hand. (Assume a perpetual inventory system) Give journal entry to record the inventory shrinkage.

On November 1, 2015, Wrenns Martch sold merchandise with a cost of $5,000 for $10,000, FOB destination, with payment terms of 3/10, n/40. Wrenns paid transportation costs of $100. Of these, merchandise sold for $3,000(with a cost of $1,500) was returned on November 6. The company received the payment for the balance amount on November 10, 2015. Calculate the Net sales revenue.