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Exam 4: Reporting and Analyzing Merchandising Operations

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Question 21

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A company has a gross margin ratio of 40%.Cost of Goods Sold equals $360,000.Its selling,general and administrative expenses total $87,500.Its sales for the period equals

A) $240,000.
B) $87,500.
C) $152,500.
D) $360,000.
E) $600,000.

F) All of the above
G) C) and D)

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Question 22

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Each sale of merchandise has two parts: the revenue side and the cost side.

A) True
B) False

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Question 23

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Harley's Antique Shop had net sales of $772,000.The gross profit was $415,000.Calculate Harley's cost of goods sold.

The following statements regarding merchandise inventory are true except:

Sales returns:

Merchandise inventory is reported in the long-term assets section of the balance sheet.

Mega Skateboard Supplier had net sales of $2.8 million,its cost of goods sold was $1.6 million,and its net income was $0.9 million.Its gross margin ratio equals:

Non-operating activities that include interest,dividend,and rent revenues,and gains from asset disposals are called ________.

Johnnycake Restaurant uses a periodic inventory system and the gross method of accounting for purchases.Prepare general journal entries to record the following transactions for Johnnycake:

A buyer using a perpetual inventory system records the costs of shipping merchandise it purchases in a Delivery Expense account.

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

A company has a gross margin ratio of 45% on net sales of $850,000.Its selling,general and administrative expenses total $212,500.Its cost of goods sold for the period equals:

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

If goods are shipped FOB shipping point,the seller does not record revenue from the sale until the goods arrive at their destination because the transaction is not complete until that point.

The acid-test ratio is defined as current assets divided by current liabilities.

Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases.The company purchased $9,750 of merchandise on August 7 with terms 1/10,n/30.On August 11,it returned $1,500 worth of merchandise.On August 16,it paid the full amount due.The correct journal entry to record the purchase on August 7 is:

A company uses the perpetual inventory system and recorded the following entry: $\begin{array}{|l|r|r|}\hline \text { Accounts Payable } & 2,500 & \\\hline \text { Merchandise Inventory } & & 50 \\\hline \text { Cash } & & 2,450 \\\hline\end{array}$ This entry reflects a:

A company purchased $10,000 of merchandise on June 15 with terms of 3/10,n/45,and FOB shipping point.The freight charge,$500,was added to the invoice amount.On June 20,it returned $800 of that merchandise.On June 24,it paid the balance owed for the merchandise taking any discount it is entitled to.The cash paid on June 24 equals:

A company had net sales of $752,000 and cost of goods sold of $543,000.Its net income was $17,530.The company's gross margin ratio equals:

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: