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Exam 5: Accounting for Merchandising Operations

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Question 81

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A company records the following journal entry: debit Cash $1,470, debit Sales Discounts $30, and credit Accounts Receivable $1,500. This means that a customer has taken a ___ cash discount for early payment.

A) 1%
B) 2%
C) 5%
D) 10%
E) 15%

F) A) and C)
G) B) and E)

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Question 82

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What are the difference(s) between the periodic and the perpetual inventory systems?

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Question 83

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Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year: Prepare the closing entries at December 31 for the current year.

Roller Blade Company uses the perpetual inventory system and had the following transactions during October: Prepare journal entries to record each of the preceding transactions.

A ___________ is an intermediary that buys products from manufacturers and sells to retailers.

A company had a gross profit of $300,000 based on sales of $400,000. Its cost of goods sold equals $700,000.

_______________________ are nonoperating activities that include interest, dividend, and rent revenues, and gains from asset disposals.

A _____________________ income statement format shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items.

Using the following year-end information for Breanna Boutique, calculate the current ratio and acid-test ratio for the boutique:

Inventory shrinkage can be computed by comparing the ___________ of inventory with recorded quantities and amounts.

Brig Company had $800,000 in net sales, $350,000 in gross profit, and $200,000 in operating expenses. Cost of goods sold equals:

Sales discounts can benefit a seller by decreasing the delay in receiving cash, and __________.

A debit memorandum is:

Which of the following accounts would be closed with a debit?

ABC Corporation's total quick assets were $5,888,000, its current assets were $11,700,000 and its current liabilities were $8,000,000. Its acid-test ratio equals:

A period's ___________________ becomes the next period's beginning inventory.

A ______________________ income statement includes cost of goods sold as another expense and shows only one subtotal for total expenses.

A buyer failed to take advantage of the vendor's credit terms of 2/15, n/45, but instead paid the invoice in full at the end of 60 days. By not taking advantage of the cash discount, the buyer lost the equivalent of ____________ annual interest on the amount of the purchase.

The amount recorded for merchandise inventory includes all of the following except:

Merchandise inventory is reported in the long-term assets section of the balance sheet.