Question 1

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 2

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

Accepted Answer

The answer of Inventory on hand can be obtained from...

Question 3

Three items are missing in each of the following columns and are identified by letter. $\begin{array}{lrr}
\text { Sales revenue } & \$(a) & \$ 840,000 \
\text { Sales returns and allowances } & 15,000 & 22,000 \
\text { Sales discounts } & 10,000 & 15,000 \
\text { Net sales } & 440,000 & \text { (d) } \
\text { Beginning inventory } & \text { (b) } & 300,000\\text { Cost of goods purchased } & 220,000 & \text { (e) } \
\text { Ending inventory } & 170,000 & 303,000 \
\text { Cost of goods sold } & 252,000 & 575,000 \
\text { Gross profit } & \text { (c) } & \text { (f) }
\end{array}$ Instructions
Calculate the missing amounts and identify them by letter.

Accepted Answer

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Question 4

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

Accepted Answer

The answer of Sales Returns and Allowances and Sales Discounts...

Question 5

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

Accepted Answer

The answer of The adjusted trial balance of Dailey Music...

Question 6

Reineman Supply Company uses a periodic inventory system. During September, the following transactions and events occurred.
Sept. 3 Purchased 90 backpacks at $25 each from Zuzu Company, terms 2/10, n/30.
Sept. 6 Received credit of $150 for the return of 6 backpacks purchased on Sept. 3 that were defective.
Sept. 9 Sold 15 backpacks for $42 each to Bailey Books, terms 2/10, n/30.
Sept. 13 Paid Zuzu Company in full.
Instructions
Journalize the September transactions for Reineman Supply Company.

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Question 7

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

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Question 8

Prepare the necessary journal entries to record the following transactions, assuming a periodic inventory system:
(a) Purchased $450,000 of merchandise on account, terms 2/10, n/30.
(b) Returned $30,000 of damaged merchandise for credit.
(c) Paid for the merchandise purchased within 10 days.

Accepted Answer

The answer of Prepare the necessary journal entries to record...

Question 9

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

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The answer of Every sales transaction should be supported by...

Question 10

Gross profit is obtained by subtracting ________________ from ________________.

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Question 11

The income statement of Jue's Luggage includes the items listed below:  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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The answer of The income statement of Jue's Luggage includes...

Question 12

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 13

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

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Question 14

The following information is available for Hopkins Company:  Instructions
Compute each of the following:
(a) Net purchases
(b) Cost of goods purchased
(c) Cost of goods sold

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The answer of The following information is available for Hopkins...

Question 15

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

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The answer of Income from operations is determined by subtracting...

Question 16

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

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The answer of The freight cost incurred by a seller...

Question 17

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 18

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

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Question 19

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

Accepted Answer

The answer of The acquisition of inventory is debited to...

Question 20

Ellen Corhy and Bryn Davis, two salespersons in adjoining territories, regularly compete for bonuses. During the last month, their dollar volume of sales, on which the bonuses are based, was nearly equal. On the last day of the month, both made a large sale. Both orders were shipped on the last day of the month and both were received by the customer on the fifth of the following month. Ellen's sale was FOB shipping point, and Bryn's was FOB destination. The company "counts" sales for purposes of calculating bonuses on the date that ownership passes to the purchaser. Ellen's sale was therefore counted in her monthly total of sales, Bryn's was not. Bryn is quite upset. She has asked you to just include it, or to take Ellen's off as well. She also has told you that you are being unethical for allowing Ellen to get a bonus just for choosing a particular shipping method.
Write a memo to Bryn. Explain your position.

Accepted Answer

The answer of Ellen Corhy and Bryn Davis, two salespersons...

Quiz 5: Accounting for Merchandising Operations

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.

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

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

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

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

Prepare the necessary journal entries to record the following transactions, assuming a periodic inventory system: (a) Purchased $450,000 of merchandise on account, terms 2/10, n/30. (b) Returned $30,000 of damaged merchandise for credit. (c) Paid for the merchandise purchased within 10 days.