ACCT 2401 Chapter 4 & 5

2/10, n/30

2% discount if paid within 10 days, otherwise net amount due within 30 days

Cash Discount

A ____ ________ is granted by the seller to encourage a buyer to pay an invoice earlier than the due date. The seller views the discount as a sales discount; the buyer views the discount as a purchase discount.

sales return

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

Retailer

A ________ is a merchandiser that buys products from either manufacturers or wholesalers and sells to the final consumer.

wholesaler

A __________ is a merchandiser that buys products from manufacturers and sells them to retailers.

Merchandiser

A ____________ Purchases merchandise (goods, inventory) for resale to customers.

Accounts Payable, 24000

Accounting for the PURCHASE of Inventory Santa Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Record Santa Fe Retailing's purchase of merchandise "as is" (with no returns) from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. In this problem, what would be credited, and for how much?

Merchandise Inventory, 24000

Accounting for the PURCHASE of Inventory Santa Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Record Santa Fe Retailing's purchase of merchandise "as is" (with no returns) from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. In this problem, what would be debited, and for how much

Cash,24000

Accounting for the PURCHASE of Inventory Santa Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Record payment by Santa Fe after the discount period. In this problem, what would be credited, and for how much?

Accounts Payable,24000

Accounting for the PURCHASE of Inventory Santa Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Record payment by Santa Fe after the discount period. In this problem, what would be debited, and for how much?

Cash,23820 and Inventory,720

Accounting for the PURCHASE of Inventory Santa Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Record payment by Santa Fe within the discount period. In this problem, what would be credited, and for how much?

Accounts Payable,24000

Accounting for the PURCHASE of Inventory Santa Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Record payment by Santa Fe within the discount period. In this problem, what would be debited, and for how much?

Accounts Receivable, 24000

Accounting for the SALE of Inventory Santa Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Record MESA'S statement for when Santa Fe makes their Payment After the discount period, answer the question below In this entry, what would be credited, and for how much?

Cash,24000

Accounting for the SALE of Inventory Santa Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Record MESA'S statement for when Santa Fe makes their Payment After the discount period, answer the question below In this entry, what would be debited, and for how much?

Accounts Receivable,24000

Accounting for the SALE of Inventory Santa Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Record MESA'S statement for when Santa Fe makes their Payment WITHIN the discount period, answer the question below In this entry, what would be credited, and for how much?

Cash,23280 and Sales Discount,720

Accounting for the SALE of Inventory Santa Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Record MESA'S statement for when Santa Fe makes their Payment WITHIN the discount period, answer the question below In this entry, what would be debited,and for how much?

Sales,24000

Accounting for the SALE of Inventory Santa Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Record Mesa Wholesaler's sale of merchandise "as is" (with no returns) to Santa Fe Retailing with credit terms of 3/10, n/60 and an invoice price of $24,000. In this entry, what would be credited, and for how much?

Accounts Receivable, 24000

Accounting for the SALE of Inventory Santa Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Record Mesa Wholesaler's sale of merchandise "as is" (with no returns) to Santa Fe Retailing with credit terms of 3/10, n/60 and an invoice price of $24,000. In this entry, what would be debited, and for how much?

Merchandise inventory, 16000

Accounting for the SALE of Inventory Santa Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Record the cost of the goods sold to Santa Fe, $16,000 In this entry, what would be credited,and for how much?

Cost of Goods Sold, 16000

Accounting for the SALE of Inventory Santa Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. Record the cost of the goods sold to Santa Fe, $16,000 In this entry, what would be debited, and for how much?

Gross Sales

Adding together your Cash Sales, and Sales on Credit, would be an example of acquiring your _____ _____

Periodic Inventory System

An inventory system in which a company does not maintain detailed records of goods on hand throughout the period and determines the cost of goods sold only at the end of an accounting period. (duplicate term)

On Account (with credit)

Assume you are buying __ _______ if a problem does not specify cash

Merchandise available for sale.

Beginning inventory + net purchases = M__________ A________ F__ S___

Gross Profit

Cost of Goods Sold is subtracted from Net Sales to determine _____ ______

Amount Paid

Cost of Inventory should equal ______ ____

5600$

Costs of $5,000 were incurred to acquire goods and make them ready for sale. The goods were shipped to the buyer (FOB shipping point) for a cost of $200(Reminder:<---this is debited to inventory as well). Additional necessary costs of $400 were incurred to acquire the goods. No other incentives or discounts were available. Compute the buyer's total cost of merchandise inventory.

Net Income

Expenses are subtracted from gross profit in order to calculate ___ ______

Net 30 (N/30)

Full payment is due within 30 days of the date of invoice (DOI - date the invoice was issued)

Cost of Goods Sold(COGS)

Goods Available For Sale - Ending Inventory = ____ __ _____ ____

Cash, Credit

If a BUYER pays the SHIPPING COST (FOB Shipping Point) the SHIPPING COST is always added to Inventory on the buyers books, which is marked as a debit, and ____ is marked as a ______ to balance the journal entry (

inventory, debit

If a BUYER pays the SHIPPING COST (FOB Shipping Point) the SHIPPING COST is always added to _________ on the buyers books, which is marked as a _____ on the Journal Entry

$18000

If a Company had 35000 of Goods Available For Sale, An Ending Inventory of 17000, and Retained Earnings of 24000, what would be the Cost Of Goods Sold?

Cash, Credit

If a SELLER pays the SHIPPING COST(FOB Destination) the shipping cost is recognized as a Selling Expense, which is marked as a debit in a Journal Entry, while ____ is marked as a ______

Selling Expense(Delivery Expense)

If a SELLER pays the SHIPPING COST(FOB Destination) the shipping cost is recognized as a _______ _______ on the seller's books

Selling Expense(Expense), Debit

If a SELLER pays the SHIPPING COST(FOB Destination) the shipping cost is recognized as a _______ _______, which is marked as a _____ in a Journal Entry

$4000

If a companies Cost of Goods Sold was 13000, They had Unearned Revenue of 23000, and their Net Sales were 9000, what would their Gross Profit be?

$8000

If a company had a Beginning Inventory of $5000, Net Purchases of 3000, and 6300$ in Unearned Revenue, what would their Goods Available For Sale =

FOB destination

If the seller is responsible for the shipping costs of merchandise sold, the shipping terms will be specified as: ___ ___________

Liability Increase with a credit (Accounts payable most of the time)

If we are purchasing from a vendor, and pay LATER which means we are paying with credit, on the journal entry, _________ _________ ____ _ ______

Cash decrease with a credit

If we are purchasing from a vendor, and pay NOW(WITH CASH) then ____ ________ ____ _ ______

Cost of goods sold

In a Journal Entry to record the Return Of Inventory, AFTER you Refund the sale at the Sales price of those goods, you need to Return the goods into inventory for the COST of those goods. In this scenario, what would be credited?

Inventory

In a Journal Entry to record the Return Of Inventory, AFTER you Refund the sale at the Sales price of those goods, you need to Return the goods into inventory for the COST of those goods. In this scenario, what would be debited?

Accounts Receivable or Cash

In a Journal Entry to record the Return Of Inventory, If you Refund the sale at the Sales price of those goods, what would be credited? ________ __________ OR ____ (two answers)

Sales Returns and Allowances

In a Journal Entry to record the Return Of Inventory, If you Refund the sale at the Sales price of those goods, what would be debited? _____ _______ AND __________

invoice

In some of the questions on the Chapter 4 homework, a company would buy something, and it would just be listed as an amount called an _______ (so instead of saying Walmart bought 1500 bottles at 4$ a piece, it would say, an _______ price of 6000) (ONLY TYPE THE WORD ONCE)

credit

Inventory is DECREASED with a ______

debit

Inventory is INCREASED with a ______

Asset

Inventory is an _____

Permanent

Is Inventory A Permanent or Temporary Account?

asset

Merchandise purchased becomes an _____ on the balance sheet

Expense

Merchandise that is SOLD becomes an _______ on the income statement

Gross Profit

Net Sales - Cost of Goods Sold = _____ ______

Cost Flow of a Merchandising Company

Net purchases plus beginning inventory equals merchandise available for sale describes the COST FLOW OF A _____________ _______

Contra Revenue

Sales Discount is a ______-_______ Account

Accounts Payable, 38600

Sydney accepts delivery of $40,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $30,000. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. Record Sydney's entry for this transaction. Sydney returns $1,400 of the $40,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $1,050. Record Sydney's entry for this transaction. Sydney pays Troy for the amount owed. Troy receives the cash immediately. Record Sydney's entry for this transaction. In this entry, what would be debited, and for how much?

Accounts Receivable,1400

Sydney accepts delivery of $40,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $30,000. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. Sydney returns $1,400 of the $40,000 of goods to Troy, who receives them the same day and restores them to its inventory. Record Troy's entry for this transaction. In this entry, what would be credited, and for how much?

Sales Return,1400

Sydney accepts delivery of $40,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $30,000. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. Sydney returns $1,400 of the $40,000 of goods to Troy, who receives them the same day and restores them to its inventory. Record Troy's entry for this transaction. In this entry, what would be debited, and for how much?

Cash,37442, Inventory 1158

Sydney accepts delivery of $40,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $30,000. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. Sydney returns $1,400 of the $40,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $1,050. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. Sydney pays Troy for the amount owed. Troy receives the cash immediately. Record Sydney's entry for this transaction using al the information above. In this entry, what would be credited, and for how much?

Inventory,30000

Sydney accepts delivery of $40,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $30,000. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. The goods cost Troy $30,000. Record Troy's entry for this transaction. In this entry, what would be credited, and for how much?

Cost of Goods Sold,30000

Sydney accepts delivery of $40,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $30,000. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. The goods cost Troy $30,000. Record Troy's entry for this transaction. In this entry, what would be debited, and for how much?

Cash,37442 and Sales Discount, 1158

Sydney accepts delivery of $40,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $30,000. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. The goods cost Troy $30,000. Record Troy's entry for this transaction. Sydney returns $1,400 of the $40,000 of goods to Troy, who receives them the same day and restores them to its inventory. Record Troy's entry for this transaction The returned goods had cost Troy $1,050. Record Troy's entry for this transaction. Sydney pays Troy for the amount owed. Troy receives the cash immediately. Record Troy's entry for this transaction In this entry, what would be debited, and for how much?

Accounts Receivable,38600

Sydney accepts delivery of $40,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $30,000. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. The goods cost Troy $30,000. Record Troy's entry for this transaction. Sydney returns $1,400 of the $40,000 of goods to Troy, who receives them the same day and restores them to its inventory. Record Troy's entry for this transaction The returned goods had cost Troy $1,050. Record Troy's entry for this transaction. Sydney pays Troy for the amount owed. Troy receives the cash immediately. Record Troy's entry for this transaction. In this entry, what would be credited, and for how much?

Cost of Goods Sold,1050

Sydney accepts delivery of $40,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $30,000. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. The returned goods had cost Troy $1,050. Record Troy's entry for this transaction. In this entry, what would be credited, and for how much?

Inventory, 1050

Sydney accepts delivery of $40,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $30,000. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. The returned goods had cost Troy $1,050. Record Troy's entry for this transaction. In this entry, what would be debited, and for how much?

Cash,345

Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. Record Sydney's entry for this transaction. In this entry, what would be Credited, and for how much?

Merchandise Inventory,345

Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. Record Sydney's entry for this transaction. In this entry, what would be debited, and for how much?

Inventory, 1400

Sydney returns $1,400 of the $40,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $1,050. Record Sydney's entry for this transaction. In this entry, what would be Credited, and for how much?

Accounts Payable,1400

Sydney returns $1,400 of the $40,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $1,050. Record Sydney's entry for this transaction. In this entry, what would be debited, and for how much?

Merchandise Inventory for 1900

Telo Company's ledger on July 31, its fiscal year-end, shows merchandise inventory of $37,800 before accounting for any shrinkage. A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $35,900. (Perpetual System) If you were preparing the entry to record any inventory shrinkage, what would be Credited here?

Cost of Goods Sold for 1900

Telo Company's ledger on July 31, its fiscal year-end, shows merchandise inventory of $37,800 before accounting for any shrinkage. A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $35,900. (Perpetual System) If you were preparing the entry to record any inventory shrinkage, what would be DEBITED here?

Credit period

The ______ ______ is the amount of time allowed before full payment is due.

Discount Period

The ________ ______ is the amount of time a cash discount is available to the buyer to make a reduced cash payment.

Periodic Inventory System

The ________ _________ ______ Does not increase or decrease the inventory account for purchases or sales nor does it record cost of goods sold at the time of each sale.

Perpetual Inventory System

The _________ _________ ______ increases the inventory account when inventory is purchased; decreases the inventory account when inventory is sold, and records cost of goods sold at the time of each sale. (duplicate term)

Inventory Shrinkage

The loss of inventory that occurs because of theft, damage, and errors.

Net Sales, Gross profit, Net Income

There are three calculated amounts on the multi-step income statement for a merchandiser and they are ___ _____ , _____ ______ and, ___ ______

Gross Profits

When Revenue isn't on an income statement, and you need to calculate Net Income, another way to do it is _____ ______ - Expenses

Debit

When satisfying a payment in full to a VENDOR (buying product) ON ACCOUNT, in a journal entry, Accounts Payable would be marked as a _____

Credit

When satisfying a payment in full, to a VENDOR (buying product) WITH A DISCOUNT, inventory is marked as a ________ because DISCOUNTS REDUCE INVENTORY ACCOUNTS

debit

When satisfying a payment in full, to a VENDOR (buying product) with NO DISCOUNT or paying after the date where a discount would apply, Accounts Payable would be marked as a _____ because you are STILL paying the full amount ON ACCOUNT

debit

When satisfying a payment to a VENDOR (buying product) in full IN CASH, with NO DISCOUNT or paying after the date where a discount would apply, CASH would be marked as a Credit while INVENTORY would be marked as a _____ since we are INCREASING our inventory and DECREASING our cash

credit

When satisfying a payment to a VENDOR (buying product) in full IN CASH, with NO DISCOUNT or paying after the date where a discount would apply, INVENTORY would be marked as a DEBIT, while CASH would be marked as a ______ since we are DECREASING our cash, and INCREASING our inventory

Credit

When satisfying a payment to a VENDOR (buying product) in full, WITH A DISCOUNT, the CASH AMOUNT BEING PAID, AFTER DISCOUNT is marked as a ______ because you are DECREASING CASH on the journal entry

Net Sales

___ _____ = Gross Sales - Sales Returns - Allowances - Discounts.

Net Income(Net Loss)

___ ______ = Gross profit - Operating Expenses

FOB shipping point

___ ________ _____ = Buyer is responsible for the shipping cost; title (ownership)transfers to the buyer when the inventory leaves the seller's place of business; the buyer bears the risk of loss while the inventory is in transit. (duplicate term)

FOB shipping point

___ ________ _____ is a freight term that means the BUYER pays the shipping cost, the BUYER bears the risk of loss during transit, and shipping costs paid by the BUYER are always ADDED+ to INVENTORY on the BUYERS BOOKS

Cost of Goods Sold (COGS)

____ __ _____ ____ is the cost of the inventory sold to customers.

gross sales

_____ _____ is the total dollar amount of all goods and services sold during the accounting period

Gross Profit Margin

_____ ______ ______ = Gross Profit / Net Sales Revenue

Gross profit

_____ ______ is the excess of Sales revenue over Cost of Goods Sold.

Sales Revenue

_____ _______ is the Revenue earned from selling inventory.

Goods Available For Sale

_____ _________ ___ ____ = Beginning Inventory + Net Purchases OR Beginning Inventory - Net Loss

Credit Terms

______ _____ are the amounts and timing of payments from a buyer to a seller.

Inventory

_________ = Products a company owns and intends to sell.

COGS

cost of goods sold is also commonly called an acronym known as _ _ _ _

n/30

credit term specifying that payment for a purchase is due within 30 days after the date of the invoice, no discount offered if this is the ONLY credit term you see

perpetual inventory system

inventory system that maintains a continual record of inventory purchased and sold (duplicate term)

FOB factory

the price of merchandise at the factory before shipment is known as ___ _______