ACCT 5/6
An invoice _______.
is the bill that the purchaser receives from the vendor
Merchandise Inventory and Cost of Goods Sold appear ________.
on the balance sheet and income statement, respectively
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 ________.
FOB shipping point
(True or False) A single-step income statement shows subtotals for gross profit and operating income.
False
Weston Jewelers uses the perpetual inventory system. On April 2, Weston sold merchandise with a cost of $ 6803 for $ 11905 to a customer on account with the terms 2/15, n/30. Weston paid $50 for delivery of the merchandise. Calculate the amount of net sales revenue. (Round your any intermediary calculations and your final answer to the nearest dollar.)
11,667
Returned $ 1300 of inventory from September 3 purchase.
Debit accounts payable, credit merchandise inventory
Paid freight bill $85?
Debit merchandise inventory, credit cash
After negotiations, received a $ 500 allowance from Tucker Wholesalers.
Debit: Account payable for 500 Credit: Merchandise inventory for 500
Made payment to Sharpner Wholesalers for goods purchased on September 3, less return and discount. (4200 without discount)
Debit: Accounts Payable—Sharpner Wholesalers 4,200 Credit Cash for 4,116 and Credit Merchandise Inventory for 84
Under the perpetual inventory system, the journal entry to record the freight paid by the seller on goods sold is:
Debit: Delivery Expenses Credit: Cash
On March 18, James Smith purchased $ 9000 of furniture from Home Furnishings on account. The cost of the goods was $ 5400. On March 20, Home Furnishings granted the customer a $ 800 sales allowance for goods damaged in transit. Which of the following represents the correct way to record this transaction?
Debit: Refunds Payable Credit: Accounts Receivable
A merchandiser sold merchandise inventory on account. The journal entry to record a sales allowance in the books of the merchandiser, using the perpetual inventory system would be:
Debit: Refunds Payable XX Credit: Accounts Receivable XX
(True or False) City Market, a small, minuscule grocer, wants to introduce an inventory system to track its inventory. The cash registers are not computer terminals. The perpetual inventory system is most suitable for its operations.
False
(True or False) The operating cycle of a merchandiser begins when the company purchases inventory from a vendor and ends when the company then sells the inventory to a customer.
False
(True or False) When a customer returns goods to the seller, the seller needs to debit Estimated Returns Inventory. The seller uses the perpetual inventory system.
False
(True or False) Defective, damaged, or otherwise unsuitable merchandise that is returned to the seller is referred to as purchase allowances by the purchaser.
False
(True or False)A merchandiser sold goods on account to Customer A for $8,000 with terms of 2/10, n/30. If the payment is received after the discount period, Accounts Receivable is decreased by $8,000.
False
(True or False)Cost of Goods Sold appears on a multi-step income statement but not on a single-step income statement.
False
Sold merchandise inventory to Small for $ 1800 on account that cost $ 738. Terms of 3/10, n/30 was offered, FOB shipping point. As a courtesy to Small, $ 40 of freight was added to the invoice for which cash was paid by Aquamarines.
First Part Debit: Accounts receivable 1786 Credit: Sales revenue 1746 AND Cash 40 Second Part Debit: COGS Credit: Merchandise Inv
Jerome Company returned $ 200 of the merchandise sold on September 15. Cost of goods returned, $ 80.
First part Debit: refunds payable 200 Credit: Accounts receivable 200 Second part: Debit: Merchandise Inventory 80 Credit: Estimated Returns Inventory 80
Sold merchandise inventory to Herman Company, $ 5700, on account. Terms 2/15, n/35. Cost of goods, $ 2565.
First part: Debit accts receivable with the discount, credit sales revenue with the discount Second Part: Debit COGS, credit sales revenues
Which of the following is shown on a multi-step income statement but not on a single-step income statement?
Gross Profit
Purchased merchandise inventory on account from Sharpner Wholesalers, $ 5500. Terms 2/15, n/EOM, FOB shipping point.
Merchandise Inv debit 5500, credit account payable
Under the perpetual inventory system, when a wholesaler returns the goods purchased on account, the ________ account is credited.
Merchandise Inventory
Gross Profit =
Sales Revenue - COGS
FOB destination refers to a situation where title to goods while in transit belongs to the ________.
Seller
(True or False) A wholesaler is a merchandiser who buys goods from a manufacturer and then sells the goods to retailers.
True
(True or False) Centennial Company sold goods on credit terms n/20 to Harper Company. This means no discounts are offered, and the amount of the invoice is due 20 days after the invoice date.
True
(True or False) Credit terms of 2/10, n/30 indicate that a discount of 2% will be given if payment is made within 10 days of the invoice date. Otherwise, the total invoice amount is due within 30 days of the invoice date.
True
(True or False) Merchandise inventory is included in a merchandising company's current assets.
True
(True or False) The perpetual inventory system keeps a running computerized record of inventory and cost of goods sold.
True
(True or False)An amount that a business earns from selling merchandise inventory is known as sales revenue or sales.
True
(True or False)Cost of Goods Sold is based on the company's cost, not the retail price.
True
Under the perpetual inventory system, when a seller grants a sales allowance _______.
a credit memo is issued
A company sold merchandise with a cost of $ 212 for $ 360 on account. The seller uses the perpetual inventory system. The entry to record the cost of merchandise sold would include ________.
a debit to Cost of Goods Sold and a credit to Merchandise Inventory for $ 212
A modern perpetual inventory system ________
achieves better control over inventory.
Value Electronics Company started its operations on January 1, 2019. Value engages in buying and selling different types of electronic gadgets. The first step in its operating cycle would be to ________.
purchase inventory from vendors
Which of the following is subtracted from net sales revenue to arrive at gross profit on a multi-step income statement?
cost of goods sold
For a merchandiser, the term "inventory" refers to ________.
goods held for sale to customers
The terms of an invoice are 3/10, n/25. This means that a ________ of the invoice date.
discount of 3 percent is allowed if the invoice is paid within 10 days after the invoice date
(True or False) An invoice is a request for payment from the purchaser.
false
