Question 1

Mather Company made a purchase of merchandise on credit from Underwood Company on August 8, for $9,000, 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

The answer of Mather Company made a purchase of merchandise...

Question 2

Computers For You is a retailer specializing in selling computers and related equipment.During 2011, 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 of freight costs associated with the sales to Sandcastles, Inc. should be treated as a selling expense and included in the operating expenses section of the income statement for Computers For You. It should not be included in the merchandise inventory or reported as an accounts receivable by Sandcastles, Inc.

Question 3

The entry to record the receipt of payment within the discount period on a sale of ¥7,500 with terms of 2/10, n/30 will include a credit to

Accepted Answer

The entry will include a credit to Accounts Receivable for ¥7,500, as this is the total amount initially recorded as receivable. The discount of ¥150 (2% of ¥7,500) is recorded separately, and the cash received will be ¥7,350.

Question 4

The collection of a ¥7,000 account within the 2 percent discount period will result in a

Accepted Answer

The answer of The collection of a ¥7,000 account within...

Question 5

Company X sells $400 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

Company Y can take a 2% discount if they pay within 10 days, which would be $8 ($400 * 0.02) off the total. The amount they would pay is $392 ($400 - $8).

Question 6

Birk Company sells merchandise on account for $3,000 to Kiner Company with credit terms of 2/10, n/30.Kiner Company returns $600 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

The answer of Birk Company sells merchandise on account for...

Question 7

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

Accepted Answer

Under the perpetual inventory system, cash freight costs incurred by the buyer for transporting goods are added to the cost of the merchandise inventory.

Question 8

Touch Tronix, Inc.sells component parts to Advanced Communications, Inc.a cell phone manufacturer.On December 10, 2011, Touch Tronix, Inc.sold €680,000 of goods to Advanced Communications, Inc.on account for €880,000.Terms of the sale were 2/10, net 30.On December 18, 2011, 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, 2011?

Accepted Answer

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

Question 9

Rasner Co.returned defective goods costing $5,000 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

The entry to record the return would be a debit to accounts payable (to decrease the amount owed to Markum Company) and a credit to inventory (to decrease inventory on hand). Since Rasner Co. received full credit, there would not be any additional entries needed. The correct entry is shown in choice A.

Question 10

Touch Tronix, Inc.sells component parts to Advanced Communications, Inc.a cell phone manufacturer.During December 10, 2011, Touch Tronix, Inc.sold €680,000 of goods to Advanced Communications, Inc.on account for €880,000.Advanced Communications, Inc.was dissatisfied with 25% of the merchandise it receives due to inferior quality.On December 21, 2011, 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, 2011?

Accepted Answer

The correct answer is A because the return of goods will decrease both assets and income by the amount of the returned goods, which is €170,000 (25% of €680,000).

Question 11

Touch Tronix, Inc.sells component parts to Advanced Communications, Inc.a cell phone manufacturer.On December 10, 2011, Touch Tronix, Inc.sold €680,000 of goods to Advanced Communications, Inc.on account for €880,000.Terms of the sale were 2/10, net 30.On December 18, 2011, 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, 2011?

Accepted Answer

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

Question 12

Stan's Market recorded the following events involving a recent purchase of merchandise:  As a result of these events, the company's merchandise inventory

Accepted Answer

The answer of Stan's Market recorded the following events involving...

Question 13

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, 2011?

Accepted Answer

Shelving materials are not part of the merchandise inventory account because they are not intended for resale. The merchandise inventory account only includes inventory items that are purchased for resale.

Question 14

On November 2, 2010, Griffey Company has cash sales of €4,200 from merchandise having a cost of €3,000.The entries to record the day's cash sales will include:

Accepted Answer

The entry to record the cost of goods sold involves debiting Cost of Goods Sold and crediting Merchandise Inventory for €3,000, reflecting the reduction in inventory.

Question 15

Touch Tronix, Inc.sells component parts to Advanced Communications, Inc.a cell phone manufacturer.On December 10, 2011, Touch Tronix, Inc.sold €680,000 of goods to Advanced Communications, Inc.on account for €880,000.Terms of the sale were 2/10, net 30.Advanced Communications, Inc.paid €13,000 in freight charges.On December 13, 2011, Advanced Communications, Inc.returned 5% of the goods due to inferior quality.On December 18, 2011, 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

The ending inventory balance is calculated as follows: Initial purchase of €680,000 minus 5% returns (€34,000) equals €646,000. The discount for early payment is 2% of €646,000, which is €12,920. Therefore, the ending inventory balance is €646,000 - €12,920 = €633,080. Adding the freight charges of €13,000 results in a final inventory balance of €646,080.

Question 16

Touch Tronix, Inc.sells component parts to Advanced Communications, Inc.a cell phone manufacturer.On December 10, 2011, Touch Tronix, Inc.sold €680,000 of goods to Advanced Communications, Inc.on account for €880,000.Terms of the sale were 2/10, net 30.On December 18, 2011, 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, 2011?

Accepted Answer

The payment was made within the discount period, so a 2% discount applies. The discount is €17,600 (€880,000 x 2%). Therefore, the assets decrease by the discount amount of €17,600 when the payment is made.

Question 17

The collection of a $900 account after the 2 percent discount period will result in a

Accepted Answer

Since the account is being collected after the discount period, the full $900 amount will be collected. Therefore, there will be a debit to Cash for $900. The other options are not correct as there is no discount being taken and the full amount is being collected.

Question 18

A credit sale of ₤1,600 is made on April 25, terms 2/10, n/30, on which a return of ₤100 is granted on April 28.What amount is received as payment in full on May 4?

Accepted Answer

The net amount due on the sale is ₤1,600 - ₤100 = ₤1,500. 
If the customer takes advantage of the discount, they will pay ₤1,500 x 0.98 = ₤1,470. 
If the customer does not take advantage of the discount, they will pay the full amount of ₤1,500 on or before May 25. 
Since the payment is received on May 4 and it is less than the full amount due, it must be the discounted amount of ₤1,470. Therefore, the correct answer is (A) ₤1,470.

Question 19

Touch Tronix, Inc.sells component parts to Advanced Communications, Inc.a cell phone manufacturer.During December 2011, Touch Tronix, Inc.sold €680,000 of goods to Advanced Communications, Inc.on account for €880,000.Advanced Communications, Inc.was dissatisfied with 25% of the merchandise it received due to inferior quality.On December 21, 2011, 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, 2011?

Accepted Answer

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

Question 20

On July 9, Neal Company sells goods on credit to Al Dolan for $4,000, terms 1/10, n/60.Neal receives payment on July 18.The entry by Neal on July 18 is:

Accepted Answer

The answer of On July 9, Neal Company sells goods...

Quiz 5: Accounting for Merchandising Operations

Mather Company made a purchase of merchandise on credit from Underwood Company on August 8, for $9,000, terms 3/10, n/30.On August 17, Mather makes the appropriate payment to Underwood.The entry on August 17 for Mather Company is:

The entry to record the receipt of payment within the discount period on a sale of ¥7,500 with terms of 2/10, n/30 will include a credit to

The collection of a ¥7,000 account within the 2 percent discount period will result in a

Company X sells $400 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?

Birk Company sells merchandise on account for $3,000 to Kiner Company with credit terms of 2/10, n/30.Kiner Company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period.What is the amount of the check?

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

Rasner Co.returned defective goods costing $5,000 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:

Stan's Market recorded the following events involving a recent purchase of merchandise: As a result of these events, the company's merchandise inventory

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, 2011?

On November 2, 2010, Griffey Company has cash sales of €4,200 from merchandise having a cost of €3,000.The entries to record the day's cash sales will include:

The collection of a $900 account after the 2 percent discount period will result in a

A credit sale of ₤1,600 is made on April 25, terms 2/10, n/30, on which a return of ₤100 is granted on April 28.What amount is received as payment in full on May 4?

On July 9, Neal Company sells goods on credit to Al Dolan for $4,000, terms 1/10, n/60.Neal receives payment on July 18.The entry by Neal on July 18 is: