Chapter 5

The following amounts relate to Amato Company for the current year: beginning Inventory, $20,000; ending inventory, $28,000; purchases, $166,000; purchase returns, $4,800; and freight-out, $6,000. The amount of cost of goods sold for the period is

$153200

Villa Sales Company had the following amounts related to its business: Beginning inventory, $12,000; Purchases, $42,000; Net sales, $50,000; and Gross profit, $15,000. The amount of the ending inventory is

$19000

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?

$3675

If beginning inventory is $60,000, cost of goods purchased is $380,000, and ending inventory is $50,000, cost of goods sold is

$390000

Jake's Market recorded the following events involving a recent purchase of merchandise: Received goods for $60,000, terms 2/10, n/30. Returned $1,200 of the shipment for credit. Paid $300 freight on the shipment. Paid the invoice within the discount period. As a result of these events, the company's inventory increased by

$57924

A credit sale of $750 is made on June 13, terms 2/10, net/30. A return of $50 is granted on June 16. The amount received as payment in full on June 23 is

$686

Hale Company sells merchandise on account for $1,000 to Long Company with credit terms of 2/10, n/30. Long Company returns $200 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

$784

Company X sells $900 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

$882

Glenn Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Glenn Company pays within the discount period?

$8820

Company A purchases $1,200 of merchandise from Company B on July 1 with credit terms 2/10, n/30. Company A returns $200 of the merchandise on July 5. On July 11, Company B received full payment from Company A. The amount of the payment on July 11 is

$980

Cleese Company sells merchandise on account for $5,000 to Langston Company with credit terms of 2/10, n/30. Langston Company returns $1,000 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

($5,000 - $1,000) × .98 = $3,920

Glover Co. returned defective goods costing $5,000 to Mal Company on April 19, for credit. The goods were purchased April 10, on credit, terms 3/10, n/30. The entry by Glover Co. on April 19, in receiving full credit is:

Accounts Payable 5,000 Purchase Discounts 120 Inventory 4,850

The journal entry to record a credit sale of merchandise is

Accounts Receivable Sales Revenue

The entry to record the receipt of payment within the discount period on a sale of $2,000 with terms of 2/10, n/30 will include a credit to

Accounts Receivable for $2,000

On July 9, Sheb Company sells goods on credit to Wooley Company for $5,000, terms1/10, n/60. Sheb receives payment on July18. The entry by Sheb on July18 is

Cash 4,950 Sales Discounts 50 Accounts Receivable 5,000

Which of the following is not part of the journal entries made when merchandise is sold on credit?

Credit the Cost of Goods Sold account

In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting

Inventory

In a perpetual inventory system, which account would be debited when goods are purchased with the intent of being resold?

Inventory

Which of the following is shown on both a multiple-step and a single-step income statement?

Net sales

Which of the following expressions is incorrect?

Operating expenses - cost of goods sold = gross profit

Which of the following is a true statement about inventory systems?

Perpetual inventory systems require more detailed inventory records.

The contra revenue account that normally has a debit balance is

Sales Returns and Allowances

A credit granted to a customer for returned goods requires a debit to

Sales Returns and Allowances and a credit to Accounts Receivable

Gross profit is

Sales revenue less cost of goods sold

FOB destination means that the seller places the goods free on board to the buyer's place of business, and the seller pays the freight.

True

Sales Returns and Allowances is a contra account to the Sales Revenue account and has a normal debit balance

True

Sales revenue less cost of goods equals net profit

True

On November 2, 2014, Kasdan Company has cash sales of $6,000 from merchandise having a cost of $3,600. The entries to record the day's cash sales will include:

a $3,600 credit to Inventory

Income from operations appears on

a multiple step income statement only

A company determines the cost of goods sold each time a sale occurs in

a perpetual inventory system only

FOB shipping point means that the

buyer pays the freight

The Sales Discounts account is a(n)

contra revenue account

The Sales Returns and Allowances account is classified as a(n)

contra revenue account

Which of the following accounts will normally appear in the ledger of a merchandising company that uses a perpetual inventory system?

cost of goods sold

Two categories of expenses for merchandising companies are

cost of goods sold and operating expenses

The collection of a $1,000 account after the 2 percent discount period will result in a

credit to Accounts Receivable for $1,000

A company that maintains a perpetual inventory system has an inventory account balance of $50,000. The physical count of goods on hand totals $49,600. Which of the following adjusting entries is correct?

debit cost of goods sold and credit inventory

The collection of a $1,500 account after the 2 percent discount period will result in a

debit to Cash for $1,500

The collection of a $6,000 account within the 2 percent discount period will result in a

debit to Sales Discounts for $120

In determining cost of goods sold

freight-in is added to net purchases

Sales revenue less cost of goods sold is called

gross profit

Costner's Market recorded the following events involving a recent purchase of merchandiselving a recent purchase of merchandise: Received goods for $40,000, terms 2/10, n/30. Returned $800 of the shipment for credit. Paid $200 freight on the shipment. Paid the invoice within the discount period. As a result of these events, the company's inventory

increased by $38616

Under the perpetual system, freight costs incurred by the buyer for the transporting of goods is recorded in

inventory

Net income is gross profit less

operating expenses

Which of the following is shown on the income statement of both merchandising and service companies?

operating expenses

In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting

purchase returns and allowances

In a periodic inventory system the entry to record the credit sale of merchandise affects which of the following accounts?

sales revenue

The primary source of revenue for a wholesaler is

the sale of merchandise

To record the sale of goods for cash in a perpetual inventory system

two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and reduction of inventory

In a perpetual inventory system, the Cost of Goods Sold account is used

whenever there is a sale of merchandise or a return of merchandise sold