Chapter 4 accounting

sales return

A ___________________ refers to merchandise that customers return to the seller after a sale.

buyers, earlier

A cash discount can be summarized as a discount given to ________________ to encourage them to pay _______________

purchase, sales

An invoice is referred to as a ________________ invoice for a buyer and as a _____________ invoice for the seller.

Credit terms stand for net 15 days after end of month

Credit terms of n/15 EOM were printed on an invoice. Explain what this means.

Debit Sales Returns and Allowances $400, Credit Accounts Receivable $400, Debit Merchandise Inventory $100, Credit Cost of Goods Sold $100

Dogs R US uses the perpetual inventory system to account for its merchandise. A customer returned merchandise. Assuming that the purchase was originally bought on credit for $400 with a cost to Dogs R US of $100, demonstrate required journal entry of Dogs R US to record the return by selecting all of the correct actions below.

Cost of goods sold

Ending inventory + __________________ = Merchandise available for sale.

Cost of goods sold is subtracted from net sales.

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

seller, customer

Explain what a credit memorandum is by completing the following sentence. When a seller grants an allowance on a previous sale, the ______________ issues a credit memorandum to inform the _____________ of a credit made to the buyer's Account Receivable in the seller's records.

credit, credit

In the Operating cycle for a merchandiser with ____________ sales, after purchasing merchandise inventory for sale to customers, the next step is to make a __________ sale

asset, expense

Merchandise inventory that is still available for sale is considered an ___________ and is reported on the balance sheet. And merchandise that is sold during the period is considered an ___________ and is reported on the income statement.

Wholesalers, retailers, net income

Merchandisers can be a ___________________. Merchandisers can be a _________________ Merchandisers earns __________ by buying and selling merchandise

Net Income

Merchandisers earn __________ by buying and selling merchandise

Debit Cash $980, debit Sales Discounts $20, credit Accounts Receivable $1,000

On June 5, Jo's Market sold $1,000 of goods on credit with terms of 2/10,n/30. How will Jo's Market record the customer's payment on June 8?

revenue, debit

Sales Discounts is a contra _____________ account and is increased with a ____________

expense, Retained earnings, revenue, expense, expense

Sales Discounts is closed with the _______________ accounts. The Dividends account is closed to ____________________. Sales is closed as a ________________ account. Sales Returns and Allowances is closed with the _______________ accounts. Cost of goods sold is closed with the ______________ accounts.

revenue, income statement

Sales is an _____________ account and is reported on the ______________

Credit to Merchandise Inventory for $50, Debit to Cost of Goods Sold for $50

Sticky Company's merchandise inventory balance at year end is $15,050, but a physical count reveals that only $15,000 of inventory exists. The adjusting entry to record the shrinkage includes: Multiple select question.

Merchandise Inventory

The balance sheet of a merchandiser and a service business have one major difference. Select the item below that would appear only on a merchandiser's balance sheet.

Credit terms 1/10, net 30

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

3/15, n/45

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

Merchandise inventory

The cost included in _______________________ are 1. Purchase Costs 2. Shipping fees 3. Costs necessary to ready the merchandise for sale.

taxes, purchase cost, shipping

The cost of merchandise includes:

receipt of cash

Thee cash operating cycle for a merchandise begins with cash purchases of merchandise and ends with __________________

Selling; general and administrative

Which are the two classifications of operating expenses on a multiple-step income statement?

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

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.

Net Income

______________ = net sales - cost of goods sold - other expenses

Gross Profit

________________ = net sales - cost of goods sold

FOB shipping, merchandise inventory, FOB destination, FOB destination

________________ means the buyer accepts ownership when the goods depart the sellers place of business. When the shipping costs are the responsibility of the buyer, the ____________________ account is debited for freight charges. Terms ___________________ means that the seller is responsible for shipping costs. Revenue for the sale will be recorded after the goods reach their destination, if the goods are shipped ___________________.

Beginning Inventory

_________________ + net purchases = Merchandise available for sale.

merchandise

_________________ consists of products or goods that a company acquires to resell to customers

perpetual inventory system

__________________ Is an inventory system that updates accounting records after each purchase and each sale of inventory

Cost of Goods Sold

__________________ is an expense reported on the income statement. ___________________ includes the expenses of buying and preparing an item for sale.

Cash discounts, cash discounts, sales discount, credit terms, purchase discount

___________________ are a reduced payment applies to the discount period. Sellers can grant _______________ to encourage buyers to pay earlier. A seller views a cash discount as a __________________. Cash discounts are described in ___________________. A buyer views a cash discount as a ____________________.

Sales discount

____________________ decrease the time that the seller has to wait for payment.

Discount period

____________________ is the time period in which a discount may be taken by the buyer.

Merchandise Inventory, merchandise inventory, merchandise inventory

______________________ is an asset increased with a debit. ________________ are products that a company owns and intends to sell. _________________is an account appearing on a balance sheet of a merchandiser.

Periodic inventory systems

______________________ is an inventory system that updates the accounting records for merchandise transactions only at the end of a period

Merchandise Inventory

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

Cost of Goods Sold

_______________is the expense of buying and preparing merchandise.