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