Accounting 1 Ch 4 P 2 SB

A __________ discount benefits a seller through earlier cash receipts and reduced collection efforts.

sales

Sales is a(n) ______ account.

revenue

Gross profit is computed as net __________ minus cost of goods sold.

sales

Sales is a(n) ___________ (expense/revenue/asset) account and is reported on the ____________ (income/balance) __________ (statement/sheet).

Blank 1: revenue Blank 2: income Blank 3: statement

Explain how to determine gross profit on an income statement by selecting the correct statement below.

Cost of goods sold is subtracted from net sales.

X-Mart uses the perpetual inventory system to account for its merchandise. On May 1, it sold $1,400 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.

Credit Merchandise Inventory $500. Debit Cash $1,400. Credit Sales $1,400. Debit Cost of Goods Sold $500.

A journal entry for a sale of merchandise on account will result in all of the following:

Credit to Merchandise Inventory Credit to Sales Debit to Cost of Goods Sold Debit to Accounts Receivable