Chapter 5
The following amounts relate to Amato Company for the current year: beginning Inventory, $20,000; ending inventory, $28,000; purchases, $166,000; purchase returns, $4,800; and freight-out, $6,000. The amount of cost of goods sold for the period is
$153200
Villa Sales Company had the following amounts related to its business: Beginning inventory, $12,000; Purchases, $42,000; Net sales, $50,000; and Gross profit, $15,000. The amount of the ending inventory is
$19000
A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?
$3675
If beginning inventory is $60,000, cost of goods purchased is $380,000, and ending inventory is $50,000, cost of goods sold is
$390000
Jake's Market recorded the following events involving a recent purchase of merchandise: Received goods for $60,000, terms 2/10, n/30. Returned $1,200 of the shipment for credit. Paid $300 freight on the shipment. Paid the invoice within the discount period. As a result of these events, the company's inventory increased by
$57924
A credit sale of $750 is made on June 13, terms 2/10, net/30. A return of $50 is granted on June 16. The amount received as payment in full on June 23 is
$686
Hale Company sells merchandise on account for $1,000 to Long Company with credit terms of 2/10, n/30. Long Company returns $200 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?
$784
Company X sells $900 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?
$882
Glenn Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Glenn Company pays within the discount period?
$8820
Company A purchases $1,200 of merchandise from Company B on July 1 with credit terms 2/10, n/30. Company A returns $200 of the merchandise on July 5. On July 11, Company B received full payment from Company A. The amount of the payment on July 11 is
$980
Cleese Company sells merchandise on account for $5,000 to Langston Company with credit terms of 2/10, n/30. Langston Company returns $1,000 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?
($5,000 - $1,000) × .98 = $3,920
Glover Co. returned defective goods costing $5,000 to Mal Company on April 19, for credit. The goods were purchased April 10, on credit, terms 3/10, n/30. The entry by Glover Co. on April 19, in receiving full credit is:
Accounts Payable 5,000 Purchase Discounts 120 Inventory 4,850
The journal entry to record a credit sale of merchandise is
Accounts Receivable Sales Revenue
The entry to record the receipt of payment within the discount period on a sale of $2,000 with terms of 2/10, n/30 will include a credit to
Accounts Receivable for $2,000
On July 9, Sheb Company sells goods on credit to Wooley Company for $5,000, terms1/10, n/60. Sheb receives payment on July18. The entry by Sheb on July18 is
Cash 4,950 Sales Discounts 50 Accounts Receivable 5,000
Which of the following is not part of the journal entries made when merchandise is sold on credit?
Credit the Cost of Goods Sold account
In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting
Inventory
In a perpetual inventory system, which account would be debited when goods are purchased with the intent of being resold?
Inventory
Which of the following is shown on both a multiple-step and a single-step income statement?
Net sales
Which of the following expressions is incorrect?
Operating expenses - cost of goods sold = gross profit
Which of the following is a true statement about inventory systems?
Perpetual inventory systems require more detailed inventory records.
The contra revenue account that normally has a debit balance is
Sales Returns and Allowances
A credit granted to a customer for returned goods requires a debit to
Sales Returns and Allowances and a credit to Accounts Receivable
Gross profit is
Sales revenue less cost of goods sold
FOB destination means that the seller places the goods free on board to the buyer's place of business, and the seller pays the freight.
True
Sales Returns and Allowances is a contra account to the Sales Revenue account and has a normal debit balance
True
Sales revenue less cost of goods equals net profit
True
On November 2, 2014, Kasdan Company has cash sales of $6,000 from merchandise having a cost of $3,600. The entries to record the day's cash sales will include:
a $3,600 credit to Inventory
Income from operations appears on
a multiple step income statement only
A company determines the cost of goods sold each time a sale occurs in
a perpetual inventory system only
FOB shipping point means that the
buyer pays the freight
The Sales Discounts account is a(n)
contra revenue account
The Sales Returns and Allowances account is classified as a(n)
contra revenue account
Which of the following accounts will normally appear in the ledger of a merchandising company that uses a perpetual inventory system?
cost of goods sold
Two categories of expenses for merchandising companies are
cost of goods sold and operating expenses
The collection of a $1,000 account after the 2 percent discount period will result in a
credit to Accounts Receivable for $1,000
A company that maintains a perpetual inventory system has an inventory account balance of $50,000. The physical count of goods on hand totals $49,600. Which of the following adjusting entries is correct?
debit cost of goods sold and credit inventory
The collection of a $1,500 account after the 2 percent discount period will result in a
debit to Cash for $1,500
The collection of a $6,000 account within the 2 percent discount period will result in a
debit to Sales Discounts for $120
In determining cost of goods sold
freight-in is added to net purchases
Sales revenue less cost of goods sold is called
gross profit
Costner's Market recorded the following events involving a recent purchase of merchandiselving a recent purchase of merchandise: Received goods for $40,000, terms 2/10, n/30. Returned $800 of the shipment for credit. Paid $200 freight on the shipment. Paid the invoice within the discount period. As a result of these events, the company's inventory
increased by $38616
Under the perpetual system, freight costs incurred by the buyer for the transporting of goods is recorded in
inventory
Net income is gross profit less
operating expenses
Which of the following is shown on the income statement of both merchandising and service companies?
operating expenses
In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting
purchase returns and allowances
In a periodic inventory system the entry to record the credit sale of merchandise affects which of the following accounts?
sales revenue
The primary source of revenue for a wholesaler is
the sale of merchandise
To record 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 reduction of inventory
In a perpetual inventory system, the Cost of Goods Sold account is used
whenever there is a sale of merchandise or a return of merchandise sold