Accounting 2001 Final Chapter 5

A credit sale of $750 is made on June 13, terms 2/10, n/30, on which a return of $50 is granted on June 16. What amount is received as payment in full on June 23? $650 $700 $735 $686

d

Beginning inventory is $12,000: purchases are $34,000: sales revenue are $60,000: and cost of goods sold is $31,000. How much is ending inventory? $14,000 $46,000 $31,000 $15,000

d

Ending inventory is $10,000, beginning inventory is $20,000, and the cost of goods purchased is $25,000. How much is cost of goods sold? $15,000 $45,000 $25,000 $35,000

d

If beginning inventory is $60,000, cost of goods purchased is $380,000, sales revenue is $800,000 and ending inventory is $50,000, how much is cost of goods sold under a periodic system? $410,000 $420,000 $440,000 $390,000

d

If sales revenues totals $400,000, cost of goods sold is $310,000, and operating expenses are $60,000, how much is the gross profit? $400,000 $340,000 $30,000 $90,000

d

In a perpetual inventory system, which accounts will the seller credit when merchandise is returned by a customer? Inventory and Cost of Goods Sold Sales Returns and Allowances and Accounts Receivable Sales Returns and Allowances and Inventory Accounts Receivable and Cost of Goods Sold

d

Marsh, Inc. paid for freight costs on merchandise it shipped to a customer. In what account will Marsh record this cost in a perpetual inventory system? Inventory Freight-in account Cost of goods sold account Freight-out account

d

Martin Company purchases $4,200 of merchandise on March 1, with credit terms of 3/10, n/30. If Martin pays on March 1, what is the cost of this purchase? $4,200 $3,864 $3,780 $4,074

d

Under what system is cost of goods sold determined at the end of an accounting period? Perpetual inventory system Double entry inventory system Single entry inventory system Periodic inventory system

d

Which of the following items does not result in an entry to the Inventory account under a perpetual system? Payment of freight costs for goods received from a supplier A purchase of merchandise A return of Inventory to the supplier Payment of freight costs for goods shipped to a customer

d

Cosmos Corporation, which uses a perpetual inventory system, purchased $2,000 of merchandise on July 5 on account. Credit terms were 2/10, n/30. It returned $400 of the merchandise on July 9. Which of the following is one effect when Cosmos pays its bill on July 21? Credit to Cash for $1,600 Debit to Cash for $1,600 Debit to Accounts Payable for $2,000 Credit to Accounts Payable for $1,600

a

Jax Company uses a perpetual inventory system and on November 30 purchased merchandise for which it must pay the shipping charges. Which of the following is one part of the required journal entry when Jax pays the shipping charges of $200? A debit to Inventory for $200 A debit to Freight-out for $200 A debit to Cash for $200 A debit to Delivery Expense for $200

a

Net income is $15,000, operating expenses are $20,000, and net sales total $75,000. How much is cost of goods sold? $40,000 $60,000 $35,000 $15,000

a

On what amount is a sales discount based? Invoice price less returns and allowances Invoice price plus freight-in Invoice less discount Invoice price plus freight-out

a

Sales revenue total to $10,000. Sales returns and allowances are $500 and sales discounts are $1,000. How much is net sales? $8,500 $11,500 $10,500 $10,000

a

Which is true about a wholesaler? It sells to another business, which will sell to a consuming customer. It sells only to manufacturing companies. It is a company that sells to consumers at a discount. It conducts large sales for consumers on a recurring basis.

a

Which of the following is classified in an income statement as a nonoperating activity? Receiving dividend revenue from an investment Returning merchandise Receiving an allowance for merchandise damaged in shipment Paying for a purchase of inventory

a

Which of the following statements is correct? A company which uses a periodic inventory system needs only one journal entry when it sells merchandise. A company which uses a periodic inventory system needs two journal entries when it sells merchandise. A company which uses a periodic inventory system debits Cost of Goods Sold and credits Inventory when it sells merchandise. None of the answer choices are correct.

a

Which of the following statements is correct? A perpetual inventory system provides better control over inventories than does a periodic inventory system. A periodic inventory system computes cost of goods sold each time a sale occurs. A perpetual inventory system computes cost of goods sold only at the end of the accounting period. A periodic inventory system provides better control over inventories than does a perpetual inventory system.

a

Which statement is true for the seller? The Sales Returns and Allowances account is debited for defective merchandise returned by a customer. The Sales Discounts account is credited for defective merchandise returned by a customer. The Sales Discounts account is debited for defective merchandise returned by a customer. The Sales Returns and Allowances account is credited for defective merchandise returned by a customer.

a

Which statement is true when recording 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 to reduce inventory. Only one journal entry is necessary. It will record the receipt of cash and sales revenue. Only one journal entry is necessary. It will record cost of goods sold and reduce of inventory. Two journal entries are necessary: one to record the receipt of cash and reduction of inventory, and one to record the the cost of goods sold and sales revenue.

a

A retailer makes a $100 sale with terms of 2/10, n/30 on the first of the month. The customer returns $20 of merchandise for credit on account. What journal entry will the retailer record when payment is received within the discount period under a perpetual inventory system? Cash 78.40 Purchase Discounts 1.60 Accounts Payable 80.00 Cash 78.40 Sales Discounts 1.60 Accounts Receivable 80.00 Accounts Payable 80.00 Cash 78.40 Purchase Discounts 1.60 Cash 98.00 Sales Discounts 2.00 Accounts Receivable 100.00

b

Arbor Corporation had reported the following amounts at December 31, 2014: Sales revenue $184,000: ending inventory $11,600: beginning inventory $17,200: purchases $60,400: purchases discounts $3,000: purchase returns and allowances $1,100: freight-in $600: freight-out $900. Calculate the cost of goods available for sale. $69,400 $74,100 $56,900 $197,700

b

In a periodic inventory system, when is the cost of the merchandise sold determined? At the time of the sale At the end of the period Periodically during the period Either at time of sale, end of period or periodically during the period

b

The operating cycle of a merchandising company is ordinarily ___________________ that of a service firm. has fewer steps than longer than the same as shorter than

b

What type of accounts are Sales Returns and Allowances and Sales Discounts? Contra expense accounts Contra revenue accounts Expense accounts Contra asset accounts

b

When credit terms of 1/15, n/60 are offered, how long is the discount period? 1 day 15 days 45 days 60 days

b

When using a periodic inventory system and the purchaser directly incurs the freight costs, which account is debited? Freight-out Freight-In Inventory Purchases

b

Which one of the following statements is correct? A company which uses a perpetual inventory system needs only one journal entry when it sells merchandise. A company which uses a perpetual inventory system needs two journal entries when it sells merchandise. A company which uses a perpetual inventory system debits inventory and credits cost of goods sold when it sells merchandise. None of the answer choices are correct.

b

Which statement is true when goods are purchased for resale by a company using a periodic inventory system? Purchase returns are debited to the Purchase Returns and Allowances account. Purchases on account are debited to the Purchases account. Freight costs are debited to the Purchases account. Purchases on account are debited to the Inventory account.

b

Assume that sales revenue are $450,000, sales discounts are $10,000, net income is $35,000, and cost of goods sold is $320,000. How much are gross profit and operating expenses, respectively? $130,000 and $95,000 $120,000 and $95,000 $120,000 and $85,000 $130,000 and $85,000

c

Myers and Company sold $1,800 of merchandise on account to Oscar, Inc. on March 1 with credit terms of 2/10, n/30. Oscar returned $500 of the merchandise due to poor quality on March 3. If Oscar pays for the purchase on March 11, what entry does Myers make to record receipt of the payment? Cash 1,764 Accounts Receivable 1,764 Cash 1,800 Sales Returns and Allowances 500 Accounts Receivable 1,300 Cash 1,274 Sales Discount 26 Accounts Receivable 1,300 Cash 1,800 Sales Discount 36 Accounts Receivable 1,764

c

Which inventory system will likely be used by a company with merchandise that has a high unit value? Periodic inventory system Single entry inventory system Perpetual inventory system Double entry inventory system

c

Which of the following is a merchandiser that sells directly to consumers? Wholesaler Service enterprise Retailer Customer

c

Which of the following is classified in an income statement as a nonoperating activity? Cost of goods sold Advertising expense Interest expense Freight-out

c

Which of these accounts normally have a debit balance? Sales Discounts only Sales Returns and Allowances only Both Sales Discounts and Sales Returns and Allowances Neither Sales Discount nor Sales Returns and Allowances

c

Which of the following statements about a periodic inventory system is true? Companies continuously maintain detailed records of the cost of each inventory purchase and sale. The periodic system provides better control over inventories than a perpetual system. The increased use of computerized systems has increased the use of the periodic system. Companies determine cost of goods sold only at the end of the accounting period.

d

Which of the following will be shown on the income statement for a merchandising company? Gross profit Cost of goods sold A sales revenue section All of the answer choices are correct

d

Which of the following would appear on both a single-step and a multiple-step income statement? Income from operations Other expenses and losses Gross profit Cost of goods sold

d

Which one of the following will result in gross profit? Operating expenses less cost of goods sold Operating expenses less net income Sales revenue less operating expenses Sales revenue less cost of goods sold

d

Discount term of 2/10, n/30 mean that a 10% cash discount is available if payment is made within 30 days. True False

f

Sales Discounts is a contra asset account. True False

f

The operating cycle of a merchandising company is ordinarily shorter than that of a service company. True False

f

Gross profit is the difference between net sales and cost of goods sold. True False

t

Sales Returns and Allowances is a contra-revenue account. True False

t