acct 2100 ch 4 practice

Calculate the total cost of merchandise purchased using the information in the following table:

$37,400

Determine which statements below are correct regarding merchandise available for sale during a period.(Check all that apply.)

- Beginning inventory + Net purchases = Merchandise available for sale - Ending inventory + Cost of goods sold = Merchandise available for sale

X-Mart uses the perpetual inventory system to account for its merchandise. On June 1, it sold $7,000 of merchandise for cash. The original cost of the merchandise to X-Mart was $500. Demonstrate the required journal entry to record the sale and the cost of the sale by selecting all of the correct actions below. (Check all that apply.)

- Debit Cost of Goods Sold $500. - Credit Merchandise Inventory $500. - Debit Cash $7,000. - Credit Sales $7,000.

Which of the statements below summarize why a buyer would desire a purchase allowance? (Check all that apply.)

- Purchased merchandise was defective or unacceptable. - In order to keep defective, but still marketable merchandise, the buyer would need a reduction in the purchase price.

Identify the statements below which summarize what cash discounts are. (Check all that apply.)

- Sellers can grant a cash discount to encourage buyers to pay earlier. - A seller views a cash discount as a sales discount. - A buyer views a cash discount as a purchase discount. - Cash discounts are described in credit terms. - A reduced payment applies to the discount period.

Review the following credit terms and identify the one that states that the buyer will receive a 3% discount if the payment is made within 15 days. Otherwise, full payment is expected within 45 days of the invoice date.

3/15,n/45

Which of the statements below are correct regarding cost of goods sold?

Cost of goods sold is the expense of buying and preparing merchandise.

Which statement below correctly explains what merchandise inventory is?

Merchandise inventory is an asset reported on the balance sheet and contains the cost of products purchased for sale.

Merchandise inventory that is still available for sale is considered ________ and is reported on the _________ and merchandise that is sold during the period is considered a(n) _______ and reported on the ________ .

asset; balance sheet; expense; income statement

Merchandise consists of _____ that a company acquires to resell to _______ .

goods; customers

Toys R Fun purchased $4,000 of merchandise and paid immediately. To record this transaction, Toys R Fun's accountant would debit the ________ account and credit the _______ account .

merchandise inventory; cash

Cost of goods sold is characterized by which of the following statements? (Check all that apply.)

- Cost of goods sold includes the expenses of buying and preparing an item for sale. - Cost of goods sold is used to figure gross profit. - Cost of goods sold is also called cost of sales. - Cost of goods sold is an expense reported on the income statement.

Which of the following costs are included in merchandise inventory? (Check all that apply.)

- Costs necessary to ready the merchandise for sale - Purchase costs - Shipping fees

LOL Music Store uses the perpetual inventory system to account for its merchandise. On November 17, it purchased $1,000 of merchandise with terms of 2/5,n/60. If payment is made on November 21, demonstrate the required journal entry to record the payment by selecting all of the correct actions below. (Check all that apply.)

- Credit Merchandise Inventory $20. - Credit Cash $980. - Debit Accounts Payable $1,000.

LOL Music Store uses the perpetual inventory system to account for its merchandise. On November 17, it purchased $1,000 of merchandise with terms of 2/5,n/60. If payment is made on December 21, demonstrate the required journal entry to record the payment by selecting all of the correct actions below. (Check all that apply.)

- Debit Accounts Payable $1,000. - Credit Cash $1,000.

X-Mart uses the perpetual inventory system to account for its merchandise. On May 1, it sold $1,400 of merchandise on credit. The original cost of the merchandise to X-Mart was $500. Demonstrate the required journal entry to record the sale and the cost of the sale by selecting all of the correct actions below. (Check all that apply.)

- Debit Accounts Receivable $1,400. - Credit Sales $1,400. - Credit Merchandise Inventory $500. - Debit Cost of Goods Sold $500.

X-Mart purchased $300 of merchandise and paid immediately. Demonstrate the journal entry to record this transaction, assuming the perpetual inventory system is used.

Debit Merchandise Inventory $300; credit Cash $300.

Credit terms of 1/10, net 30 means.

The buyer will receive a 1% discount if they pay within 10 days of the date of the invoice.

In the operating cycle for a merchandiser with credit sales, after purchasing merchandise inventory for sale to customers, the next step is to make a _______ sale.

credit

The cash operating cycle for a merchandiser begins with cash purchases of merchandise and ends with _____.

receipt of cash

Explain how to compute gross profit by completing the following sentence. Gross profit is calculated by taking the net _______ of a product and _______ the cost of the goods sold.

sales; subtracting