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Exam 5: Accounting for Merchandising Activities

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Question 21

True/False

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The Merchandise Inventory account balance at the end of one period is the amount of beginning inventory in the next period.

A) True
B) False

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Question 22

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Periodic inventory systems were historically used by companies that sold large quantities of low-value items.

A) True
B) False

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Question 23

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Merchandisers

Cost of goods sold is

In a perpetual inventory system, the net cost of purchases is accumulated in the Inventory account.

A classified multiple-step income statement is a format that shows intermediate totals between sales and profit and detailed calculations of net sales and cost of goods sold.

Complete the work sheet for the year ended October 31, 2020.

On December 5, Z-Mart purchased $1,800 worth of merchandise. On December 7, Z-Mart returned $800 worth of merchandise. On December 8, it paid the balance in full after taking a 2% discount. The amount of the payment was

Provincial sales tax (PST) is normally calculated on the original purchase price plus the goods and services tax (GST) or Harmonized Sales Tax (HST).

Sales returns and allowances

The agreed cost of an item to be purchased by a business on credit is $4,000. The applicable cost will be debited to advertising expense. The item is subject to 5% goods and services tax (GST) and 7% provincial sales tax (PST) . When this transaction is recorded, what amount will be debited to advertising expense?

Z-Mart purchased $3,000 worth of merchandise on credit. Transportation costs were an additional $100, paid cash to the cartage company on delivery. Z-Mart returned $300 worth of merchandise and paid the invoice on time, and took a 2% purchase discount. The amount of this payment was

Evenflow had the following transactions for October: Prepare journal entries to record each of the preceding transactions. Assume a perpetual inventory system.

Goods and services tax (GST) or Harmonized Sales Tax (HST) is calculated on the original purchase price plus the provincial sales tax (PST).

For a business, goods and services tax (GST) and/or Harmonized Sales Tax (HST) paid is included in the amount recorded as an asset or an expense when a purchase is made.

Merchandise inventory is

Expenses that support the overall operations of a business and include the expenses of such activities as providing accounting services, human resource management, and financial management are called

A journal entry with a debit to cash of $980, a debit to Sales Discounts of $20, and a credit to Accounts Receivable of $1,000 means that a customer has taken a 10% cash discount for early payment.

Calculate net sales, gross profit, and gross profit ratio for each of the following situations. Round the gross profit ratio figure to the nearest whole percent. a. Which situation has the highest net sales? b. Which situation has the highest gross profit ratio?

A periodic inventory system requires updating the inventory account at the beginning of an accounting period.