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Exam 6: Accounting for Merchandising Businesses

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Question 121

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Gadget Palace is a retailer selling unique hardware. Gadget Palace uses a perpetual inventory system. Journalize the following transactions:July 5Gadget Palace purchases inventory for sale from Turbo Tools for $11,400 with terms 2/10, n/30.6Gadget Palace pays Fast Truck Transport $75 for freight on the July 5 order.8Gadget Palace receives a credit memo from Turbo Tools for $215 for damaged merchandise.15Gadget Palace pays Turbo Tools the balance due.?? $\textbf { Journal } \\\begin{array} { | c | c | c | c | c | } \hline \textbf { Date } & \textbf { Description } & \begin{array} { c } \textbf { Post. } \\\textbf { Ref. }\end{array} & \textbf { Debit } & \textbf { Credit } \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline\end{array}$ ??

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?? \[\textbf { Journal } \\
\begin{array ...

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Question 122

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Which of the following accounts should be closed at the end of the fiscal year?

A) Merchandise Inventory
B) Accumulated Depreciation
C) Drawing
D) Cost of Merchandise Sold

E) C) and D)
F) None of the above

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Question 123

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Merchandise is sold for $3,600, terms FOB destination, 2/10, n/30, with prepaid freight costs of $150. The amount of the sales recorded is $3,528.

Under the periodic inventory system, the journal entry to record the cost of merchandise sold at the point of sale will include which of the following?

Which of the following accounts would be included in the chart of accounts of a merchandising company using the (a) periodic inventory system, (b) perpetual inventory system, or (c) both systems?? (1) Purchases (2) Merchandise Inventory (3) Sales (4) Purchases Discounts (5) Cost of Merchandise Sold (6) Freight In (7) Delivery Expense

When merchandise purchased on account is returned under the perpetual inventory system, the buyer would debit

Which of the following accounts has a normal credit balance?

When comparing a retail business to a service business, the financial statement that changes the least is the

Most companies will not take a purchase discount, because 1% or 2% discounts are insignificant.

Freight is the amount paid by the seller to deliver merchandise sold to a customer under FOB shipping point.

What type of company would normally offer trade discounts to its customers?

Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes a

If the physical count of inventory revealed $158,000 of merchandise on hand and the inventory records reported $163,000, what would be the necessary adjusting entry to record inventory shrinkage?

$\text { Match each of the following terms } ( a - h ) \text { with the correct definition below. }$ -Inventory system that updates the merchandise inventory account for every purchase and sales transaction. a. Credit terms b. FOB destination c. FOB shipping point d. Periodic inventory system e. Perpetual inventory system f. Inventory shrinkage g. Single-step income statement h. Multiple-step income statement

When comparing a retail business to a service business, the financial statement that changes the most is the

A seller may grant a buyer a reduction in selling price and this is called a customer discount.