chapter 5 account exam for USF

what does terms 1/15, net 45 mean?

1% discount, 15 days to pay for it to be applicable,

Merchandise subject to terms 2/10, n/30, FOB shipping point, is sold on account to a customer for $14,900. What is the amount of sales discount allowable?

298

Merchandise subject to terms 2/10, n/30, FOB shipping point, is sold on account to a customer for $25,000. What is the amount of sales discount allowable?

500 2%*25000

Pierce Company sold to Stanton Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000. Pierce prepaid the $500 shipping charge. Which of the following entries does Pierce make to record this sale?

Accounts Receivable—Stanton, debit $19,600; Sales, credit $19,600, and Accounts Receivable—Stanton, debit $500; Cash, credit $500

In recording the cost of goods sold for cash, based on data available from perpetual inventory records, the journal entry is

Debit cost of goods sold, credit inventory

Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes a

Debit to Inventory

On September 4, Real Housewares has $16,500 in sales, with customers paying $10,750 in cash and the remainder on account. Real Housewares purchased the goods for $4,800. Prepare the journal entries required to record the sales using a perpetual inventory system.

Sept. 4 Cash 10,750 Accounts Receivable 5,750 Sales 16,500 Sept. 4 Cost of Goods Sold 4,800 Inventory 4,800

When merchandise purchased on account is returned under the perpetual inventory system, the buyer would debit

accounts payable

Where are selling and administrative expenses found on the multiple-step income statement?

after gross profit

Which of the following accounts should be closed to Income Summary at the end of the fiscal year?

cost of goods sold

sales-black=gross profit

cost of goods sold

The arrangements between buyer and seller as to when payments for merchandise are to be made are called

credit terms

Calculator Using a perpetual inventory system, the entry to record the return of merchandise purchased on account includes a

credit to inventory

Merchandise with a sales price of $1,800 is sold on account with terms 2/10, n/30. The journal entry to record the sale would include a

credit to sales for 1764

Inventory is classified on the balance sheet as a

current asset

Cumberland Co. sells $2,000 of inventory to Hancock Co. for cash. Cumberland paid $1,250 for the merchandise. Under a perpetual inventory system, which of the following journal entry(ies) would be recorded?

debit Cash, $2,000; credit Sales, $2,000; and debit Cost of Goods Sold, $1,250; credit Inventory, $1,250

Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a

debit to inventory

sales salaries, store supplies used, depreciation of office equipment, office supplies used, delivery expense, sales salaries, advertising expenses

selling expenses

sales-cost of goods sold-operating expenses

income from operations

Cost of goods sold=

inventory+purchases-later inventory

When comparing a retail business to a service business, the financial statement that changes the least is the

retained earnings

Bird & Bottle purchases goods from Bottle Co. Delivery expenses are to be paid when the balance is due. Is this purchase considered to be FOB destination or FOB shipping?

FOB shipping point

Norfolk Sporting Goods purchases merchandise with a catalog list price of $14,029. The retailer receives a 25% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the Inventory account? Round your answer to the nearest whole dollar.

10311

Taking advantage of a 2/10, n/30 purchases discount is equal to a yearly savings rate of approximately

24%

Merchandise is purchased for $6,000 on September 2 subject to terms of 2/10, n/30, FOB destination. Freight costs paid by the seller totaled $200. What is the required payment if paid on September 12?

5880

A company using the periodic inventory system has inventory costing $210 on hand at the beginning of a period. During the period, merchandise costing $635 is purchased. At year-end, inventory costing $160 is on hand. The cost of goods sold for the year is

685 Cost of goods sold = Beginning inventory + Inventory purchased - Ending inventory = $210 + $635 - $160 = $685

A sales invoice included the following information: merchandise price, $5,300; terms 1/10, n/eom; FOB shipping point with prepaid freight of $589 added to the invoice. Assuming that a credit for merchandise returned of $1,100 is granted prior to payment and that the invoice is paid within the discount period, what is the amount of cash that should be received by the seller?

Cash received = Sales - Sales discount + Prepaid freight - Cost of merchandise returned = $5,300 - (1% × $5,300) + $589 - [$1,100 - (1% × $1,100)] = $5,300 - $53 + $589 - ($1,100 - $11) = $5,836 - $1,089 = $4,747

The Corbit Corp. sold merchandise for $10,000 cash. The cost of the goods sold was $7,590. The journal entries to record this transaction under the perpetual inventory system would be

Cash10,000 Sales10,000

Merchandise with a sales price of $5,000 is sold on account with terms 2/10, n/30. The journal entry to record the sale would include a

Credit to Sales for 4,900 (5000*.98)

When comparing a retail business to a service business, the financial statement that changes the most is the

Income Statement

Which of the following accounts usually has a debit balance?

Inventory

Which of the following accounts will not be found in the Cost of Goods Sold section of the income statement for a company using the periodic inventory method?

Selling Expense

If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as

fob shipping point

gross sales=

gross profit+cost of goods sold

Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the accounting period. Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory. Under the periodic inventory system, the purchase of inventory will be debited to the Purchases account.

differences between periodic and perpetual inventory systems

If title to merchandise purchases passes to the buyer when the goods are delivered to the buyer, the terms are

fob destination