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Exam 5: Accounting for Merchandising Operations

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Question 61

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All of the following statements related to U.S.GAAP and IFRS are true except:

A) Accounting for basic inventory transactions is the same under the two systems.
B) The closing process for merchandisers is the same under both systems.
C) U.S.GAAP offers little guidance about the presentation order of expenses.
D) Neither system requires separate disclosure of items when their size,nature,or frequency are important.
E) Neither system defines operating income.

F) A) and D)
G) A) and C)

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Question 62

Multiple Choice

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On March 12,Klein Company sold merchandise in the amount of $7,800 to Babson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,500.Klein uses the perpetual inventory system.On March 15,Babson returns some of the merchandise.The selling price of the merchandise is $600 and the cost of the merchandise returned is $350.Babson pays the invoice on March 20,and takes the appropriate discount.The amount that Klein receives from Babson on March 20 is:

A) $7,800.
B) $7,644.
C) $7,044.
D) $7,056.
E) $7,200.

F) A) and D)
G) A) and E)

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Question 63

Multiple Choice

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On March 12,Klein Company sold merchandise in the amount of $7,800 to Babson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,500.Klein uses the perpetual inventory system.The journal entry or entries that Klein will make on March 12 is:

Prepare journal entries to record the following merchandising transactions of Margin Company,which applies the perpetual inventory system.Margin Company offers all of its credit customers credit terms of 2/10,n/30.

Serene Spa Sales uses the perpetual inventory system and had the following transactions during August. Required: Prepare the general journal entries to record these transactions.

When preparing an unadjusted trial balance using a periodic inventory system,the amount shown for Merchandise Inventory is:

FOB _________________ means the buyer accepts ownership when the goods depart the seller's place of business.The buyer is responsible for paying shipping costs and bears the risk of damage or loss when goods are in transit.

Which of the following accounts is used in the periodic inventory system but not used in the perpetual inventory system?

Sabor Company uses a perpetual inventory system and purchased $17,800 of merchandise on April 7 with credit terms of 1/10,n/30.Merchandise with a cost of $1,800 was damaged and returned to the seller on April 10.On April 16 the company paid the amount due.Prepare the journal entries to record the transactions on all three dates.

A company purchased $1,800 of merchandise on July 5 with terms 2/10,n/30.On July 7,it returned $200 worth of merchandise.On July 28,it paid the full amount due.The amount of the cash paid on July 28 equals:

A _____________________ income statement format shows detailed computations of net sales and other costs and expenses,and reports subtotals for various classes of items.

On May 1,Shilling Company sold merchandise in the amount of $5,800 to Anders,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Shilling uses the perpetual inventory system.The journal entry or entries that Shilling will make on May 1 is:

A company purchased $10,000 of merchandise on June 15 with terms of 3/10,n/45.On June 20,it returned $800 of that merchandise.On June 24,it paid the balance owed for the merchandise taking any discount it was entitled to.The cash paid on June 24 equals:

_________________ are the amounts and timing of payment from a buyer to a seller.

Inventory shrinkage can be computed by comparing the ___________ of inventory with recorded quantities and amounts.

A company's net sales were $676,600,its cost of goods sold was $236,810 and its net income was $33,750.Its gross margin ratio equals:

On March 12,Klein Company sold merchandise in the amount of $7,800 to Babson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,500.Klein uses the perpetual inventory system.On March 15,Babson returns some of the merchandise.The selling price of the returned merchandise is $600 and the cost of the merchandise returned is $350.The entry or entries that Klein must make on March 15 is:

On September 12,Vander Company sold merchandise in the amount of $5,800 to Jepson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Vander uses the periodic inventory system.The journal entry or entries that Vander will make on September 12 is:

A company has net sales of $752,000 and cost of goods sold of $543,000.Its net income is $17,530.The company's gross margin and operating expenses,respectively,are:

A company's gross profit was $83,750 and its net sales were $347,800.Its gross margin ratio equals: