Question 1

Powers Company has the following account balances:  The cost of goods purchased for the period is

Accepted Answer

The answer of Powers Company has the following account balances:...

Question 2

In a worksheet for a merchandising company, Merchandise Inventory would appear in the

Accepted Answer

Merchandise Inventory appears in the trial balance because it is considered an asset. It also appears in the statement of financial position, as it is one of the components of current assets. And it appears in the adjusted trial balance, as it is subject to adjustments such as inventory shrinkage or impairment.

Question 3

At the beginning of the year, Meng Company had an inventory of ¥400,000.During the year, the company purchased goods costing ¥1,600,000.If Meng Company reported ending inventory of ¥600,000 and sales of ¥2,000,000, the company's cost of goods sold and gross profit rate must be

Accepted Answer

Beginning Inventory: ¥400,000
Purchases during the year: ¥1,600,000
Goods available for sale: ¥2,000,000 (400,000 + 1,600,000)
Ending Inventory: ¥600,000
Cost of Goods Sold: ¥1,400,000 (2,000,000 - 600,000)
Gross Profit: ¥600,000 (2,000,000 - 1,400,000)
Gross Profit Rate: 30% (Gross Profit/Sales) * 100 = (600,000/2,000,000) * 100 = 30%

Therefore, the correct answer is B) ¥1,400,000 and 30%.

Question 4

Under a periodic inventory system, acquisition of merchandise is debited to the

Accepted Answer

Under a periodic inventory system, the purchases account is used to record the acquisition of merchandise. The cost of goods sold account is not affected until the end of the period when a physical inventory is taken and the cost of goods sold is calculated. The merchandise inventory account is also not affected until the end of the period when a physical inventory is taken to determine the ending inventory balance. The accounts payable account is only affected when payment is made for the merchandise purchased.

Question 5

In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting

Accepted Answer

The answer of In a perpetual inventory system, a return...

Question 6

The Merchandise Inventory account balance appearing in a worksheet represents the

Accepted Answer

The Merchandise Inventory account balance represents the ending inventory, which is the cost of inventory on hand at the end of an accounting period.

Question 7

In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting

Accepted Answer

In a periodic inventory system, the account used to record returns of defective merchandise to a supplier is Purchase Returns and Allowances. This account is used to track the amount of inventory that is returned to suppliers due to defects, damage, or other reasons. By recording these returns in the Purchase Returns and Allowances account, the company can effectively track the amount of inventory that is being returned and adjust their records accordingly.

Question 8

The Freight-in account

Accepted Answer

The Freight-in account is used to record the cost of transporting goods purchased to the buyer's location. As this cost is directly related to the purchase of merchandise, it is included in the cost of goods sold and increases the cost of merchandise purchased. Hence, Option A is the correct choice.

Question 9

Cartier Company purchased inventory from Pissaro Company.The shipping costs were $400 and the terms of the shipment were FOB shipping point.Cartier would have the following entry regarding the shipping charges:

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The answer of Cartier Company purchased inventory from Pissaro Company.The...

Question 10

The respective normal account balances of Purchases, Purchase Discounts, and Freight-in are

Accepted Answer

Purchases and Freight-in are both expense accounts and have a debit normal balance. Purchase Discounts is a contra expense account and has a credit normal balance.

Question 11

The journal entry to record a return of merchandise purchased on account under a periodic inventory system would be

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The answer of The journal entry to record a return...

Question 12

During the year, Carla's Pet Shop's merchandise inventory decreased by $30,000.If the company's cost of goods sold for the year was $450,000, purchases must have been

Accepted Answer

The merchandise inventory decreased by $30,000 during the year, which means that the cost of goods sold was $30,000 higher than the purchases made during the year.

We can use the formula:

Cost of goods sold = Beginning inventory + Purchases - Ending inventory

to solve for purchases, given that we know the cost of goods sold and the decrease in inventory.

Rearranging the formula, we get:

Purchases = Cost of goods sold - Beginning inventory - Ending inventory

We don't know the beginning inventory or ending inventory, but we know that the ending inventory must have decreased by $30,000 as well (since this is the same amount as the decrease in merchandise inventory).

Therefore, we can simplify the formula to:

Purchases = Cost of goods sold - Ending inventory - Decrease in inventory
Purchases = $450,000 - Ending inventory - $30,000
Purchases = $420,000 - Ending inventory

Since we don't know the value of ending inventory, we can't calculate an exact value for purchases. However, we do know that purchases must be lower than $420,000 (since if ending inventory was $0, then purchases would be $420,000).

Therefore, the best choice is B ($420,000).

Question 13

Cost of goods available for sale is computed by adding

Accepted Answer

Cost of goods available for sale is the total cost of inventory that a company has available for sale during a specific period. It is calculated by adding the beginning inventory to the cost of goods purchased during the period. So, choice B is the correct answer.

Question 14

Logan Company made a purchase of merchandise on credit from Claude Corporation on August 3, for $3,000, terms 2/10, n/45.On August 10, Logan makes the appropriate payment to Claude.The entry on August 10 for Logan Company is

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

Question 15

Cole Company has sales revenue of ₤13,000, cost of goods sold of ₤8,000 and operating expenses of ₤3,000 for the year ended December 31.Cole's gross profit is

Accepted Answer

Gross Profit = Sales Revenue - Cost of Goods Sold
Gross Profit = ₤13,000 - ₤8,000
Gross Profit = ₤5,000

Question 16

Net purchases plus freight-in determines

Accepted Answer

The answer of Net purchases plus freight-in determines
...

Question 17

Which one of the following transactions is recorded with the same entry in a perpetual and a periodic inventory system?

Accepted Answer

The answer of Which one of the following transactions is...

Question 18

Which of the following accounts has a normal credit balance?

Accepted Answer

The answer of Which of the following accounts has a...

Question 19

Gould Shoe Store has a beginning merchandise inventory of €30,000.During the period, purchases were €140,000; purchase returns, €4,000; and freight-in €10,000.A physical count of inventory at the end of the period revealed that €20,000 was still on hand.The cost of goods available for sale was

Accepted Answer

Beginning inventory + Purchases − Purchase returns + Freight-in = Cost of goods available for sale 
€30,000 + €140,000 − €4,000 + €10,000 = €176,000

Question 20

At the beginning of September, 2011, GLF Company reported Merchandise Inventory of $4,000.During the month, the company made purchases of $11,700.At September 30, 2011, a physical count of inventory reported $4,800 on hand.Cost of goods sold for the month is

Accepted Answer

Beginning Inventory = $4,000
Purchases = $11,700
Total Goods Available = $15,700
Ending Inventory = $4,800
Cost of Goods Sold = Beginning Inventory + Purchases - Ending Inventory
Cost of Goods Sold = $4,000 + $11,700 - $4,800 = $10,900.

Quiz 5: Accounting for Merchandising Operations

Powers Company has the following account balances: The cost of goods purchased for the period is