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Exam 5: Merchandising Operations

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Question 21

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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.

A) purchase returns
B) sales returns
C) purchase allowances
D) sales allowances

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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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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 ________.

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.

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

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.

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.

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 ________.

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 ________.

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.

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

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

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

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

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:

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 ________.

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. $\begin{array} { | l | l | l | } \hline \text { FOB Term } & \begin{array} { l } \text { When does the title to the goods } \\\text { transfer to the buyer? }\end{array} & \\\text { Shipping Point } & & \text { Who pays the freight? } \\\hline \text { Destination } & & \\\hline\end{array}$

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