Question 1

Distinguish between FOB shipping point and FOB destination. Identify the freight terms that will result in a debit to Inventory by the purchaser and a debit to Freight-out by the seller.

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Question 2

Brahma Supply Company uses a periodic inventory system. During September the following transactions and events occurred.
Sept. 3 Purchased 70 backpacks at $50 each from South Slope Company terms 2/10 n/30.
Sept. 6 Received credit of $300 for the return of 6 backpacks purchased on Sept. 3 that were defective.
Sept. 9 Sold 15 backpacks for $84 each to Outdoor Sports terms 2/10 n/30.
Sept. 13 Paid South Slope Company in full.
Instructions
Journalize the September transactions for Brahma Supply Company.

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Question 3

When a customer returns merchandise previously purchased on credit the entry for the seller to record the return requires a debit to the ________________ account and a credit to the ________________ account.

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Question 4

A merchandiser frequently has a need to use contra accounts related to the sale of goods. Identify the contra accounts that have normal debit balances and explain why they are not considered expenses.

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Question 5

The adjusted trial balance of Bon Jovi Music Company appears below. Bon Jovi Music Company prepares monthly financial statements and uses the perpetual inventory method.
Instructions
Complete the worksheet below.

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Question 6

Sales Returns and Allowances and Sales Discounts are both ______________ accounts and have _______________ normal balances.

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Question 7

The acquisition of inventory is debited to the ____________ account when a perpetual inventory system is used.

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Question 8

Inventory on hand can be obtained from detailed inventory records when a ________________ inventory system is maintained.

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Question 9

Three items are missing in each of the following columns and are identified by letter.
Instructions
Calculate the missing amounts and identify them by letter.

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Question 10

The following information is available for Hopkins Company: $$\begin{array} { l r } 
\text { Beginning inventory } & \$ 45,000 \
\text { Ending inventory } & 70,000 \
\text { Freight-in } & 10,000 \
\text { Purchases } & 290,000 \
\text { Purchase returns and allowances } & 8,000
\end{array}$$ Instructions
Compute each of the following:
(a) Net purchases
(b) Cost of goods purchased
(c) Cost of goods sold

Accepted Answer

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Question 11

The income statement of Leang's Luggage includes the items listed below: $$\begin{array} { l r } 
\text { Net sales } & \$ 875,000 \
\text { Gross profit } & 305,000 \
\text { Beginning inventory } & 75,000 \
\text { Purchase discounts } & 12,000 \
\text { Purchase returns and allowances } & 8,000 \
\text { Freight-in } & 10,000 \
\text { Operating expenses } & 320,000 \
\text { Purchases } & 560,000
\end{array}$$ Instructions
Use the appropriate items listed above as a basis for determining:
(a) Cost of goods sold.
(b) Cost of goods available for sale.
(c) Ending inventory.

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Question 12

Gross profit is obtained by subtracting ________________ from ________________.

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Question 13

Every sales transaction should be supported by a ________________ that provides written evidence of the sale.

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Question 14

The freight cost incurred by a seller to deliver goods sold to a customer is called ________________.

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Question 15

Income from operations is determined by subtracting total operating expenses from ________________.

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Question 16

Match the items below by entering the appropriate code letter in the space provided.

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Question 17

Prepare the necessary journal entries to record the following transactions assuming a periodic inventory system:
(a) Purchased $450000 of merchandise on account terms 2/10 n/30.
(b) Returned $30000 of damaged merchandise for credit.
(c) Paid for the merchandise purchased within 10 days.

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Question 18

Armando Martinez believes revenues from credit sales may be recognized before they are collected in cash. Do you agree? Explain.

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Question 19

Cost of goods sold is deducted from net sales revenue for the period in order to arrive at ________________.

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Question 20

A ________________ buys and sells goods rather than performing services to earn a profit.

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Quiz 5: Accounting for Merchandising Operations

Distinguish between FOB shipping point and FOB destination. Identify the freight terms that will result in a debit to Inventory by the purchaser and a debit to Freight-out by the seller.

When a customer returns merchandise previously purchased on credit the entry for the seller to record the return requires a debit to the account and a credit to the account.

A merchandiser frequently has a need to use contra accounts related to the sale of goods. Identify the contra accounts that have normal debit balances and explain why they are not considered expenses.

The adjusted trial balance of Bon Jovi Music Company appears below. Bon Jovi Music Company prepares monthly financial statements and uses the perpetual inventory method. Instructions Complete the worksheet below.

Sales Returns and Allowances and Sales Discounts are both accounts and have _ normal balances.