Ch. 4 SB halfway done

On May 14, X-Mart purchased $500 of merchandise with terms of 3/15,n/40. If payment is made on May 28, calculate the purchase discount that may be taken by X-Mart.

$15

On June 5, X-Mart purchased $400 of merchandise with terms of 2/10,n/30. If payment is made on June 11, calculate the purchase discount that may be taken by X-Mart.

$8

The buyer and seller of merchandise must agree on who is responsible for paying freight terms. Show your understanding of freight terms by selecting all of the correct statements below.

-Revenue for the sale will be recorded after the goods reach their destination, if the goods are shipped FOB destination .-Terms FOB shipping point means the buyer accepts ownership when the goods depart the seller's place of business. -Terms FOB destination means that the seller is responsible for shipping costs .-When the shipping costs are the responsibility of the buyer, then the Merchandise Inventory account is debited for the freight charges.

1. Retailer. 2. Wholesaler. 3. Merchandiser.

1. An intermediary that buys products from manufacturers or wholesalers and sells them to consumers. 2. An intermediary that buys products from manufacturers and sells them to retailers 3. Earns net income by buying and selling products

The discount period is the time__________the invoice date and a specified date on which the payment amount owed can be_____________because of early payment

1. between. 2. reduced.

Toys R Fun purchased $4,000 of merchandise and paid immediately. To record this transaction, Toys R Fun would debit the Merchandise _________ account and credit the _________ account.

1. inventory. 2. cash.

Review the following credit terms and identify the one that states that 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.

3/15, n/45

What is a purchase return?

A purchase returns refers to merchandise a buyer purchases, but then returns to the seller

Identify the statements below which summarize what cash discounts are.

A seller views a cash discount as a sales discount. Sellers can grant a cash discount to encourage buyers to pay earlier. A reduced payment applies to the discount period. A buyer views a cash discount as a purchase discount. Cash discounts are described in the credit terms.

Cost of goods sold is characterized by which of the following statements?

Cost of goods sold includes the expenses of buying and preparing an item for sale. Cost of goods sold is also called cost of sales. Cost of goods sold is used to figure gross profit. Cost of goods sold is an expense reported on the income statement.

Which of the statements below are correct regarding cost of goods sold?

Cost of goods sold is the expense of buying and preparing merchandise.

X-Mart purchased $300 of merchandise and paid immediately. Demonstrate the journal entry to record this transaction, assuming the perpetual inventory system is used.

Debit Merchandise Inventory $300; credit Cash $300.

X-Mart purchased $300 of merchandise on credit. Demonstrate the journal entry to record this transaction, assuming the perpetual inventory system is used.

Debit Purchases $300; credit Accounts Payable $300.

Determine which statements below are correct regarding merchandise available for sale during a period. (Check all that apply.)

Ending inventory + Cost of goods sold = Merchandise available for sale Beginning inventory + Net purchases = Merchandise available for sale

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

FOB (Free on board) destination

Complete the following statement. Merchandise inventory that is still available for sale is considered a(n) _asset_ (asset/expense/revenue) and is reported on the _balance sheet_ (balance sheet/income statement) and merchandise that is sold during the period is considered a(n) _expense_ (asset/expense/liability) and reported on the _income statement_ (balance sheet/income statement).

Field 1: asset or assets Field 2: balance sheet Field 3: expense or expenses Field 4: income statement

A purchase return refers to merchandise a _________ purchased, but then returns to the __________ for a refund of the purchase price or reduction in the amount owed.

Field 1: buyer Field 2: seller

A cash discount can be summarized as a discount given to ________to encourage them to pay_________.

Field 1: buyers Field 2: earlier

Which statement below correctly describes merchandise inventory?

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

Determine which of the following statements about merchandise is correct.

Merchandise is acquired for resale to customers.

Explain what the credit terms of 2/10,n/30 mean.

The buyer can deduct 2% of the invoice amount if payment is made within 10 days of the invoice date. The full payment is due within a 30-day credit period.

Merchandise inventory can be described as:

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

A sales return refers to merchandise that __________ return to the ___________ after a sale for a refund of the purchase price or reduction in the amount owed.

customers seller

Jan's Jams makes a credit sale for $300 with terms of 2/10,n/30. The cost of the merchandise is $200. The required journal entry to record the sale and the cost of the sale is:

debit Accounts receivable $300, credit sales $300, debit cost of goods sold $200, credit merchandise inventory $200

Sales is a(n) Blank______ account.

revenue

Gross profit is computed as net __________ minus cost of goods sold.

sales

Review the following statements and select the one that best describes a discount period.

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