Question 1

Touch Tronix, Inc. sells component parts to Advanced Communications, Inc. a cell phone manufacturer. During December 2014, Touch Tronix, Inc. sold €1,020,000 of goods to Advanced Communications, Inc. on account for €1,320,000. Advanced Communications, Inc. was dissatisfied with 25% of the merchandise it received due to inferior quality. On December 21, 2014, Advanced Communications, Inc. returns the goods to Touch Tronix, Inc. for credit. Which of the following is true regarding the statement of financial position for Advanced Communications, Inc. at December 31, 2014?

Accepted Answer

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Question 2

Touch Tronix, Inc. sells component parts to Advanced Communications, Inc. a cell phone manufacturer. On December 10, 2014, Touch Tronix, Inc. sold €1,020,000 of goods to Advanced Communications, Inc. on account for €1,320,000. Terms of the sale were 2/10, net 30. Advanced Communications, Inc. paid €19,500 in freight charges. On December 13, 2014, Advanced Communications, Inc. returned 5% of the goods due to inferior quality. On December 18, 2014, Advanced Communications, Inc. paid the account in full. Advanced Communications, Inc. uses a perpetual inventory system. If Advanced Communications, Inc. has not yet sold any of these goods, what is the ending balance in the inventory account after the payment is made?

Accepted Answer

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Question 3

Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods are recorded in

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Question 4

The collection of a ¥9,000 account within the 2 percent discount period will result in a

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Question 5

Stan's Market recorded the following events involving a recent purchase of merchandise: Received goods for $30,000, terms 2/10, n/30.
Returned $600 of the shipment for credit.
Paid $150 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company's inventory

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Question 6

The entry to record the receipt of payment within the discount period on a sale of ¥12,500 with terms of 2/10, n/30 will include a credit to

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Question 7

Mather Company made a purchase of merchandise on credit from Underwood Company on August 8, for $6,000, terms 3/10, n/30. On August 17, Mather makes the appropriate payment to Underwood. The entry on August 17 for Mather Company is:

Accepted Answer

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Question 8

A credit sale of ₤3,200 is made on April 25, terms 2/10, n/30, on which a return of ₤200 is granted on April 28. What amount is received as payment in full on May 4?

Accepted Answer

The amount due after the return is ₤3,000 (₤3,200 - ₤200). The customer is eligible for a 2% discount if payment is made within 10 days, which is ₤60 (2% of ₤3,000). Therefore, the amount received as payment in full on May 4 is ₤2,940 (₤3,000 - ₤60).

Question 9

On November 2, 2014, Griffey Company has cash sales of €7,000 from merchandise having a cost of €5,000. The entries to record the day's cash sales will include:

Accepted Answer

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Question 10

The collection of a $1,200 account after the 2 percent discount period will result in a

Accepted Answer

The collection of a $1,200 account after the 2 percent discount period means that the full amount of $1,200 will be credited to Accounts Receivable and a debit of the same amount will be made to Cash since the customer has paid. There is no discount to be given, so there is no need to debit Sales Discounts.

Question 11

Computers For You is a retailer specializing in selling computers and related equipment. During 2014, Computers For You sells $200,000 of merchandise to Sandcastles, Inc. Computers For You incurs $24,000 of freight costs associated with these sales. Which of the following is true regarding how this $24,000 is treated on the financial statements?

Accepted Answer

The $24,000 in freight costs incurred by Computers For You is part of the cost of goods sold and should be included in the calculation of gross profit on the income statement. Therefore, Computers For You will report the $24,000 as part of operating expenses on the income statement. It is not part of inventory or accounts receivable for either Computers For You or Sandcastles, Inc.

Question 12

Computers For You is a retailer specializing in selling computers and related equipment. Which of the following would not be reported in the merchandise inventory account reported on the statement of the financial position for Computers For You at December 31, 2014?

Accepted Answer

Shelving materials purchased during December 2014 are not considered part of the merchandise inventory account, as they are not merchandise being held for sale. Only goods purchased for resale and their associated costs, such as freight, would be reported in the merchandise inventory account on the statement of the financial position.

Question 13

Touch Tronix, Inc. sells component parts to Advanced Communications, Inc. a cell phone manufacturer. On December 10, 2014, Touch Tronix, Inc. sold €1,020,000 of goods to Advanced Communications, Inc. on account for €1,320,000. Terms of the sale were 2/10, net 30. On December 18, 2014, Advanced Communications, Inc. paid the account in full. Which of the following is true regarding the impact on the statement of financial position for Touch Tronix, Inc. when the payment is made on December 18, 2014?

Accepted Answer

When Advanced Communications, Inc. paid the account in full on December 18, 2014, Touch Tronix, Inc.'s accounts receivable decreased by €1,020,000 (the amount owed by Advanced Communications, Inc.), but its cash increased by €1,293,600 (the amount received after the discount was applied). Therefore, the net effect on Touch Tronix, Inc.'s assets was a decrease of €26,400 (€1,020,000 - €1,293,600 = -€26,400).

Question 14

Birk Company sells merchandise on account for $5,000 to Kiner Company with credit terms of 2/10, n/30. Kiner 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?

Accepted Answer

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Question 15

Rasner Co. returned defective goods costing $8,000 to Markum Company on April 19, for credit. The goods were purchased April 10, on credit, terms 3/10, n/30. The entry by Rasner Co. on April 19, in receiving full credit is:

Accepted Answer

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Question 16

On July 9, Neal Company sells goods on credit to Al Dolan for $6,000, terms 1/10, n/60. Neal receives payment on July 18. The entry by Neal on July 18 is:

Accepted Answer

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Question 17

Company X sells $600 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?

Accepted Answer

The credit terms 2/10, n/30 means that if Company Y pays within 10 days, they can take a 2% discount on the merchandise cost, otherwise the full amount is due within 30 days.

If Company Y takes advantage of the discount, they will pay 98% of the total merchandise cost:
$600 x 0.98 = $588

Therefore, the amount of Company Y's check will be $588.

Question 18

Touch Tronix, Inc. sells component parts to Advanced Communications, Inc. a cell phone manufacturer. On December 10, 2014, Touch Tronix, Inc. sold €1,020,000 of goods to Advanced Communications, Inc. on account for €1,320,000. Terms of the sale were 2/10, net 30. On December 18, 2014, Advanced Communications, Inc. paid the account in full. Advanced Communications, Inc. uses a perpetual inventory system. Which of the following is true regarding the impact on the statement of financial position for Advanced Communications, Inc. when the payment is made on December 18, 2014?

Accepted Answer

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Question 19

Touch Tronix, Inc. sells component parts to Advanced Communications, Inc. a cell phone manufacturer. On December 10, 2014, Touch Tronix, Inc. sold €1,020,000 of goods to Advanced Communications, Inc. on account for €1,320,000. Terms of the sale were 2/10, net 30. On December 18, 2014, Advanced Communications, Inc. paid the account in full. Advanced Communications, Inc. uses a perpetual inventory system. Which of the following is true regarding the impact on the statement of financial position for Advanced Communications, Inc. when the payment is made on December 18, 2014?

Accepted Answer

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Question 20

Touch Tronix, Inc. sells component parts to Advanced Communications, Inc. a cell phone manufacturer. During December 10, 2014, Touch Tronix, Inc. sold €1,020,000 of goods to Advanced Communications, Inc. on account for €1,320,000. Advanced Communications, Inc. was dissatisfied with 25% of the merchandise it receives due to inferior quality. On December 21, 2014, Advanced Communications, Inc. returns the goods to Touch Tronix, Inc. for credit. Which of the following is true regarding the statement of financial position and the income statement for Touch Tronix, Inc. at December 31, 2014?

Accepted Answer

The answer of Touch Tronix, Inc. sells component parts to...

Quiz 5: Accounting for Merchandising Operations

Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods are recorded in

The collection of a ¥9,000 account within the 2 percent discount period will result in a

The entry to record the receipt of payment within the discount period on a sale of ¥12,500 with terms of 2/10, n/30 will include a credit to

Mather Company made a purchase of merchandise on credit from Underwood Company on August 8, for $6,000, terms 3/10, n/30. On August 17, Mather makes the appropriate payment to Underwood. The entry on August 17 for Mather Company is:

A credit sale of ₤3,200 is made on April 25, terms 2/10, n/30, on which a return of ₤200 is granted on April 28. What amount is received as payment in full on May 4?

On November 2, 2014, Griffey Company has cash sales of €7,000 from merchandise having a cost of €5,000. The entries to record the day's cash sales will include:

The collection of a $1,200 account after the 2 percent discount period will result in a

Computers For You is a retailer specializing in selling computers and related equipment. Which of the following would not be reported in the merchandise inventory account reported on the statement of the financial position for Computers For You at December 31, 2014?

Birk Company sells merchandise on account for $5,000 to Kiner Company with credit terms of 2/10, n/30. Kiner 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?

Rasner Co. returned defective goods costing $8,000 to Markum Company on April 19, for credit. The goods were purchased April 10, on credit, terms 3/10, n/30. The entry by Rasner Co. on April 19, in receiving full credit is:

On July 9, Neal Company sells goods on credit to Al Dolan for $6,000, terms 1/10, n/60. Neal receives payment on July 18. The entry by Neal on July 18 is:

Company X sells $600 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?