Accounting 5

During the current year, merchandise is sold for $207,800 cash and $579,900 on account. The cost of the goods sold is $582,900. What is the amount of the gross profit?

$204,800

Assume the following data concerning a purchase of merchandise by Icon Co. on April 2: April 2. Purchased $4,000 of merchandise on account from Gamma Co., terms 2/10, n/30. 4. Returned $2,000 of the merchandise purchased on April 2. 12. Paid for the purchase of April 2 less the return and discount. The purchase amount that Icon Co. would record on April 2 would be $3,200. $3,920. $4,000. $3,290.

$3,920.

For a recent year, TechMart reported sales of $45,513 million. Its gross profit was $12,744 million. What was the amount of TechMart's cost of goods sold?

$32,769 million

How is gross profit for a merchandise business determined? sales minus cost of goods sold gross profit minus operating income sales revenue plus depreciation expense operating income plus sales

A merchandise business shows a gross profit line.

Which of the following describes how a merchandise income statement is different from a service income statement? The revenue from a merchandise business is reported as fees earned. The program and production expenses are subtracted from gross profit to arrive at operating income. Depreciation and amortization expenses are added to the cost of goods sold. A merchandise business shows a gross profit line.

A merchandise business shows a gross profit line.

Which of the following are not true about the periodic inventory system? A physical count of inventory is not taken at the end of the period. Purchases of inventory are not recorded in the inventory account. The sales of merchandise are not recorded in the inventory account. There is no detailed record of the amount of inventory on hand at any given time. abcd

A physical count of inventory is not taken at the end of the period.

Under the gross method, when the customer pays within the discount period, which of the following accounts is not recorded in the journal entry to record the cash receipt? Sales Accounts Receivable Cost of Goods Sold Cash

Cost of Goods Sold

Which of the following accounts is NOT used in the closing process under the periodic inventory system? Cost of Goods Sold Purchases Purchases Discounts Estimated Returns Inventory

Cost of Goods Sold

Which of the following is reported on both a multiple-step income statement and a single-step income statement? Gross profit Operating income Cost of goods sold Other revenue and expense

Cost of goods sold

Which of the following is NOT a common subsidiary ledger? Inventory subsidiary ledger Accounts payable subsidiary ledger Accounts receivable subsidiary ledger Cost of goods sold subsidiary ledger

Cost of goods sold subsidiary ledger

What is the normal balance of the following accounts? a. Cost of Goods Sold b. Customer Refunds Payable c. Delivery Expense d. Estimated Returns Inventory e. Inventory f. Sales g. Sales Tax Payable

Debit Credit Debit Debit Debit Credit Credit

Inventory shrinkage is recorded by which of the following adjusting entries? Debit Cost of Goods Sold, credit Inventory Debit Inventory, credit Cost of Goods Sold Debit Inventory, credit Inventory Shrinkage Debit Inventory Shrinkage, credit Inventory

Debit Cost of Goods Sold, credit Inventory

For a service business, which of the following would NOT be a line item on the income statement? Operating income Fees earned Operating expenses Gross profit

Gross profit

Which state does not have a sales tax? Oregon Washington state Tennessee Illinois

Oregon

The asset turnover ratio is measured by which of the following formulas? Sales divided by average total assets Sales divided by total assets Sales divided by average current assets Sales divided by current assets abcd

Sales divided by average total assets

What is the major advantage of the multiple-step income statement over the single-step income statement?

The multiple-step income statement shows the relationship of gross profit to sales.

You will not pay sales tax on merchandise you purchase on the Internet if You are not a resident of the state where the vendor is. The vendor ships merchandise to a customer in a state where the company does not have a physical location. Both you and the vendor are in the same state. The vendor is shipping from a physical location in a state where sales tax is charged.

The vendor ships merchandise to a customer in a state where the company does not have a physical location.

After the amount due on a sale of $20,300, terms 2/10, n/eom, is received from a customer within the discount period, the seller consents to the return of the entire shipment for a cash refund. The cost of the merchandise returned is $12,180. a. What is the amount of the refund owed to the customer? b. Journalize the entries made by the seller to record the return and the refund.

a. $19,894 - The amount of the refund will be the merchandise returned less the discount. b. Inventory 12,180 Estimated Returns Inventory 12,180 Customer Refunds Payable 19,894 Cash 19,894

A retailer is considering the purchase of 1,000 units of a specific item from either of two suppliers. Their offers are as follows: Supplier One: $34.80 a unit, 1/10, n/30, no charge for freight. Supplier Two: $35.00 a unit, 2/10, n/30, plus freight of $200. a. Price of Supplier One: b. Price of Supplier Two: c. Which of the two offers, Supplier One or Supplier Two, yields the lower price?

a. $34,452 b. $34,500 c. Supplier One

During the current year, merchandise is sold for $893,000. The cost of the goods sold is $509,010. a. What is the amount of the gross profit? b. Compute the gross profit percentage (gross profit divided by sales). c. Will the income statement always report a operating income?

a. $383,990 b. 43% c. No - net income is revenue (sales) less all expenses, including the cost of merchandise sold.

Nieman Company purchased merchandise on account from Springhill Company for $5,800, terms 1/10, n/30. Nieman returned merchandise with an invoice amount of $1,000 and received full credit. a. If Nieman Company pays the invoice within the discount period, what is the amount of cash required for the payment? If required, round the answer to the nearest dollar. b. What account is debited by Nieman Company to record the return?

a. $4,752 b. Accounts Payable-Springhill Company

Determine the amount to be paid in full settlement of each of two invoices, (a) and (b), assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period. If required, round the answers to the nearest dollar. Merchandise (Invoice Amount) a. $7,150 b.4,000 Freight Paid by Seller a. $300 b. $500 Freight Terms a .FOB destination, 2/10, n/30 b. FOB shipping point, 1/10, n/30 Returns and Allowances (Invoice Amount) a. $1,100 b. $900

a. $5,929 b. $3,569

The Stationery Company purchased merchandise on account from a supplier for $11,300, terms 1/10, n/30. The Stationery Company returned merchandise with an invoice amount of $1,500 and received full credit. a. If The Stationery Company pays the invoice within the discount period, what is the amount of cash required for the payment? b. Under a perpetual inventory system, what account is credited by The Stationery Company to record the return?

a. $9,702 b. Inventory - Any discounts or returns are recorded directly by the buyer who reduces the balances of Accounts Payable and Inventory, using a debit memo based on the net cost of the merchandise.

Jones Co. returned merchandise purchased from Smith Co. Under the perpetual inventory system, the journal entry to record the return of merchandise by Jones would be debit Accounts Payable—Jones Co., credit Inventory. debit Accounts Receivable—Jones Co., credit Inventory. debit Purchases Returns and Allowances, credit Inventory. debit Inventory, credit Accounts Payable—Jones Co.

debit Accounts Payable—Jones Co., credit Inventory.

On July 20, Rich Company sold merchandise to York Associates on account, terms FOB destination. Rich Company would record the freight cost as a __________ to __________. debit; Inventory credit; Inventory debit; Delivery Expense credit; Delivery Expense

debit; Delivery Expense

Which of the following is subtracted from gross profit to reach operating income? programming and production and expenses amortization expenses depreciation expenses selling, administrative revenue, and manufacturing costs

depreciation expenses

Which of the following items are not considered "other revenue" on the multiple-step income statement? interest income rent revenue gains resulting from the sale of fixed assets fees earned

fees earned

When the physical inventory on hand at the end of the accounting period is less than the balance of Inventory, the difference is known as merchandise available for sale. cost of goods sold. inventory shrinkage. allowance for inventory.

inventory shrinkage

Which is the inventory system in which each purchase and sale of merchandise is recorded in an inventory account?

perpetual inventory system

Land used in the operations of the business is classified under __________ on the balance sheet. current assets current liabilities property, plant, and equipment long-term liabilities

property, plant, and equipment

When comparing the gross and net methods of recording sales discounts, which of the following entries differ between the two methods? recording cash received when the discount is not taken recording adjusting entry for sales discount allowances recording cash received when the discount is taken recording the sale of goods

recording adjusting entry for sales discount allowances

The liability for the sales tax is incurred when the sales contract is agreed on. merchandise arrives via the Internet sale. sale is made. loan is obtained.

sale is made.

When merchandise is sold, the revenue is reported as sales, and its cost is recognized as an expense called the cost of goods sold. inventory expense. sales expense. depreciation expense.

the cost of goods sold.