Question 1

Use this information to answer the following question. $$\begin{array} { | l | r | r | } 
\hline \text { Accaunt Name } &  { \text { Debit } } & { \text { Credit } } \
\hline \text { Sales } & & 300,000 \
\hline \text { Sales Returns and Allowances } & 10,000 & \
\hline \text { Purchases } & 68,000 & \
\hline \text { Purchases Returns and Allowances } & &8 , 0 0 0  \
\hline \text { Freight-In } & 12,000 & \
\hline \text { Selling Eagenses } & 30,000 & \
\hline \text { General and Adninictrative Eagenses } & 110,000 & \
\hline
\end{array}$$ In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
If beginning and ending merchandise inventories were ignored in computing net income,then net income would be

Accepted Answer

Ignoring the change in inventory would result in an overstatement of net income by the amount of the decrease in inventory, which is $22,000 - $14,000 = $8,000.

Question 2

Which of the following is not considered in computing net cost of purchases?

Accepted Answer

Freight-out expenses are not considered in computing net cost of purchases because they are expenses related to delivering goods to customers and are not directly related to the cost of purchasing the goods.

Question 3

Assuming that net cost of purchases was $58,000 during the year and that ending merchandise inventory was $1,000 less than the beginning merchandise inventory of $12,500,how much was cost of goods sold?

Accepted Answer

The answer of Assuming that net cost of purchases was...

Question 4

Use this information to answer the following question. The selected accounts and balances for Keystone Market appear as follows:
$$\begin{array} { l r } 
\text { Advertieing Esguense } & 14,000 \
\text { Common Stock } & 100,000 \
\text { Dividends } & 21,000 \
\text { Fraight-In } & 7,000 \
\text { Freight-Out Esgense } & 10,000 \
\text { Interest Income } & 24,000 \
\text { Merchandise Inventory (Jan. 1) } & 58,000 \
\text { Merchandise Inventory (Dec. 31) } & 56,000 \
\text { Purchases } & 60,000 \
\text { Purchases Returns and Allowances } & 4,000 \
\text { Rent Exgense } & 9,000 \
\text { Retained Earning } & 40,000 \
\text { Sales } & 150,000 \
\text { Sales Returns and Allowances } & 19,000 \
\text { Wages Engense } & 32,000
\end{array}$$ Goods available for sale would appear on the income statement as

Accepted Answer

Goods available for sale is calculated by adding the beginning inventory to the cost of goods purchased during the period. 
Beginning inventory = $13,000 
Cost of goods purchased = $108,000 
Goods available for sale = $13,000 + $108,000 = $121,000 
Therefore, goods available for sale would appear on the income statement as $121,000.

Question 5

Feathertouch Company sold merchandize worth $800 on credit,terms n/15.The merchandize sold had cost $550.What is the required journal entry to record the transaction under the perpetual inventory system?

Accepted Answer

The journal entry to record the sale of merchandise on credit under the perpetual inventory system is:
Accounts Receivable - $800 (debit)
Sales - $800 (credit)
Cost of Goods Sold - $550 (debit)
Inventory - $550 (credit)
Therefore, the correct journal entry is option A.

Question 6

Use this information to answer the following question. $$\begin{array} {| l | r | r | } 
\hline \text { Account Name } &  { \text { Debit } } & { \text { Credit } } \
\hline \text { Sales } & & 300,000 \
\text { Sales Retums and Allowances } & 10,000 & \
\text { Purcha5es } & 53,000 & \
\text { Purchases Returns and Allowances } & & 8,000\
\text { Freight-In } & 12,000 &  \
\text { Selling Exgenses } & 30,000 & \
\text { General and Administrative Exgenses } & 110,000 &\
\hline
\end{array}$$ In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
Net cost of purchases for the period were

Accepted Answer

To find the net cost of purchases, we need to subtract the beginning inventory from the sum of ending inventory and cost of goods sold. We are given the beginning and ending inventory. Cost of goods sold can be calculated as follows:

Beginning inventory + Purchases - Ending inventory = Cost of goods sold 
$22,000 + Purchases - $14,000 = Cost of goods sold 
Purchases = $14,000 + Cost of goods sold - $22,000 
Purchases = $-8,000 + Cost of goods sold

We can see that the net purchases must be $8,000 more than the cost of goods sold. From the given information, we know that the cost of goods sold is $49,000. Thus, the net cost of purchases must be $49,000 + $8,000 = $57,000. Therefore, the best choice is C.

Question 7

Chancellor Company purchased merchandize worth $900 on credit,terms n/30.What is the required journal entry to record the transaction under the periodic inventory system?

Accepted Answer

The answer of Chancellor Company purchased merchandize worth $900 on...

Question 8

Use this information to answer the following question. $$\begin{array} {| l | r | r | } 
\hline \text { Account Name } &  { \text { Debit } } & { \text { Credit } } \
\hline \text { Sales } & & 303,000 \
\text { Sales Retums and Allowances } & 10,000 & \
\text { Purcha5es } & 68,000 & \
\text { Purchases Returns and Allowances } & &8,000 \ 
\text { Freight-In } & 12,000 &  \
\text { Selling Exgenses } & 30,000 & \
\text { General and Administrative Exgenses } & 110,000 &\
\hline
\end{array}$$ In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
Net sales for the period were

Accepted Answer

We need to use the formula:

Net Sales = Gross Sales - Sales Returns and Allowances - Discounts

From the given information, we have:
Gross Sales = $300,000
Sales Returns and Allowances = $3,000
Discounts = $4,000

Substituting these values in the formula, we get:

Net Sales = $300,000 - $3,000 - $4,000

Net Sales = $293,000

Therefore, the correct answer is C) $293,000.

Question 9

Feathertouch Company sold merchandize worth $800 on credit,terms n/15 and on the next day the customer returned merchandize worth $50,which cost $30 for Feathertouch company.What is the required journal entry to record the merchandize returns under the perpetual inventory system?

Accepted Answer

The journal entry to record merchandise returns involves two accounts- Sales Returns and Allowances and Cost of Goods Sold. Sales Returns and Allowances is debited for the amount of merchandise returned ($50) while Cost of Goods Sold is credited for the cost of that merchandise ($30). The total amount of merchandise sold on credit is also reduced by $50. Therefore, the correct journal entry is:
Sales Returns and Allowances      50
Accounts Receivable                      50
Cost of Goods Sold                       30
Inventory                                            30

Question 10

Use this information to answer the following question. The selected accounts and balances for Keystone Market appear as follows:
$$\begin{array} { l r } 
\text { Advertieing Esguense } & 14,000 \
\text { Common Stock } & 100,000 \
\text { Dividends } & 21,000 \
\text { Fraight-In } & 7,000 \
\text { Freight-Out Esgense } & 10,000 \
\text { Interest Income } & 24,000 \
\text { Merchandise Inventory (Jan. 1) } & 70,000 \
\text { Merchandise Inventory (Dec. 31) } & 56,000 \
\text { Purchases } & 60,000 \
\text { Purchases Returns and Allowances } & 4,000 \
\text { Rent Exgense } & 9,000 \
\text { Retained Earning } & 40,000 \
\text { Sales } & 150,000 \
\text { Sales Returns and Allowances } & 19,000 \
\text { Wages Engense } & 32,000
\end{array}$$ The amount of net sales on the income statement would be

Accepted Answer

The answer of Use this information to answer the following...

Question 11

Under the perpetual inventory system,the entry to record a purchase return would include a credit to which account?

Accepted Answer

Under the perpetual inventory system, when a purchase return occurs, the Merchandise Inventory account is credited to reduce the inventory balance because the goods are no longer in inventory.

Question 12

Which of the following is necessary for computing cost of goods sold but not necessary for computing goods available for sale?

Accepted Answer

The answer of Which of the following is necessary for...

Question 13

Use this information to answer the following question. $$\begin{array} {| l | r | r | } 
\hline \text { Account Name } &  { \text { Debit } } & { \text { Credit } } \
\hline \text { Sales } & & 300,000 \
\text { Sales Retums and Allowances } & 10,000 & \
\text { Purcha5es } & 53,000 & \
\text { Purchases Returns and Allowances } & & 8,000\
\text { Freight-In } & 12,000 &  \
\text { Selling Exgenses } & 30,000 & \
\text { General and Administrative Exgenses } & 110,000 &\
\hline
\end{array}$$ In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
Cost of goods sold for the period was

Accepted Answer

Cost of goods sold = Beginning inventory + Purchases - Purchases returns and allowances + Freight-in - Ending inventory= 22,000 + 53,000 - 8,000 + 12,000 - 14,000= $74,000

Question 14

Under the perpetual inventory system,in addition to making the entry to record a sales return,a company would

Accepted Answer

When a company records a sales return under the perpetual inventory system, it increases Merchandise Inventory and decreases Cost of Goods Sold to reflect the return of goods to inventory and the reversal of the cost associated with the sale.

Question 15

Assume a company uses the periodic inventory system and has a beginning merchandise inventory balance of $5,000,purchases of $75,000,and sales of $125,000.The company closes its records once a year on December 31.In the accounting records,the merchandise inventory account would be expected to have a balance on December 31 prior to adjusting and closing entries that was

Accepted Answer

The answer of Assume a company uses the periodic inventory...

Question 16

Chancellor Company purchased merchandize worth $900 on credit,terms n/30.What is the required journal entry to record the transaction under the perpetual inventory system?

Accepted Answer

The journal entry for this transaction would be to debit Merchandise Inventory for $900 and credit Accounts Payable for $900. Therefore, option C is the correct choice. Option A and B are incorrect because they do not include the correct accounts for this transaction, and option D is incorrect because it includes a debit to Cash, which was not involved in this credit transaction.

Question 17

Chancellor Company purchased merchandize worth $900 on credit,terms n/30 and returned merchandize worth $100 on next day.What is the required journal entry to record the merchandize returns under the perpetual inventory system?

Accepted Answer

The journal entry for the merchandise return would be to credit the accounts payable account for $100 and debit the inventory account for $100. This would reduce the value of inventory on hand to reflect the return, and reduce the amount owed to the supplier for the original purchase. The correct journal entry is:
Accounts Payable     $100
Inventory                   $100

Question 18

The amount of goods available for sale during the year depends on the amounts of

Accepted Answer

The answer of The amount of goods available for sale...

Question 19

Use this information to answer the following question. $$\begin{array} {| l | r | r | } 
\hline \text { Account Name } &  { \text { Debit } } & { \text { Credit } } \
\hline \text { Sales } & & 319,000 \
\text { Sales Retums and Allowances } & 10,000 & \
\text { Purcha5es } & 68,000 & \
\text { Purchases Returns and Allowances } & & 8,000\
\text { Freight-In } & 12,000 &  \
\text { Selling Exgenses } & 30,000 & \
\text { General and Administrative Exgenses } & 110,000 &\
\hline
\end{array}$$ In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
Income before income taxes for the period was

Accepted Answer

To calculate income before income taxes, first determine the net sales: $319,000 (Sales) - $10,000 (Sales Returns and Allowances) = $309,000. Then calculate the cost of goods sold (COGS): $22,000 (Beginning Inventory) + $68,000 (Purchases) + $12,000 (Freight-In) - $8,000 (Purchases Returns and Allowances) - $14,000 (Ending Inventory) = $80,000. Subtract COGS from net sales to get gross profit: $309,000 - $80,000 = $229,000. Finally, subtract operating expenses: $229,000 - $30,000 (Selling Expenses) - $110,000 (General and Administrative Expenses) = $89,000.

Question 20

Use this information to answer the following question. The selected accounts and balances for Keystone Market appear as follows:
$$\begin{array} { l r } 
\text { Advertieing Esguense } & 14,000 \
\text { Common Stock } & 100,000 \
\text { Dividends } & 21,000 \
\text { Fraight-In } & 7,000 \
\text { Freight-Out Esgense } & 10,000 \
\text { Interest Income } & 24,000 \
\text { Merchandise Inventory (Jan. 1) } & 70,000 \
\text { Merchandise Inventory (Dec. 31) } & 56,000 \
\text { Purchases } & 60,000 \
\text { Purchases Returns and Allowances } & 4,000 \
\text { Rent Exgense } & 9,000 \
\text { Retained Earning } & 40,000 \
\text { Sales } & 151,000 \
\text { Sales Returns and Allowances } & 19,000 \
\text { Wages Engense } & 32,000
\end{array}$$ Gross margin from sales would be

Accepted Answer