FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 4: Accounting for Merchandising Businesses

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 61

Essay

Review LaterAdd Note

Review Later

On April 6,2016,Gringot Company purchased $140,000 of merchandise inventory.Terms of the purchase included a discount of 3/20,n/30 and the freight terms were FOB destination.Freight costs amounted to $4,600.Gringot paid the account payable on April 24.Gringot sold all inventory for $189,500. Required: Determine the amount of gross margin Gringot would report on the income statement.

Correct Answer

verified

$53,500 (see below)
Step 1: $140,000 - (...

View Answer

Show Answer

Question 62

Multiple Choice

Review LaterAdd Note

Review Later

Use the following for questions Sanchez Company engaged in the following transactions during 2015: 1) Started the business by issuing $42,000 of common stock for cash. 2) The company paid cash to purchase $26,400 of inventory. 3) The company sold inventory that cost $16,000 for $30,600 cash. 4) Operating expenses incurred and paid during the year,$14,000. Sanchez Company engaged in the following transactions during 2016: 1) The company paid cash to purchase $35,200 of inventory. 2) The company sold inventory that cost $32,800 for $57,000 cash. 3) Operating expenses incurred and paid during the year,$18,000. Note: Sanchez uses the perpetual inventory system. -The amount of retained earnings at December 31,2016 is:

A) $6,200.
B) $26,000.
C) $6,800.
D) $38,800.

E) B) and C)
F) A) and B)

Correct Answer

verified

Show Answer

Question 63

Essay

Review LaterAdd Note

How do gains and losses differ from revenues and expenses? How are they similar?

Indicate whether each of the following statements is true or false. _____ a)A merchandising company generates revenue primarily by selling goods to customers. _____ b)The supply of goods accumulated to deliver when sales are made is called Supplies. _____ c)Retail companies are firms that sell goods to other businesses. _____ d)Product costs include all costs associated with the sale of products. _____ e)WalMart is an example of a wholesale company.

Use the following for questions Use the following account numbers and corresponding account titles to answer the next three questions. 55.Which accounts would appear on the income statement? A.Account numbers 3,4,7,8,and 9. B.Account numbers 3,4,5,7,and 9. C.Account numbers 2,3,7,8,and 9. D.Account numbers 3,5,7,and 8. Answer: A Learning Objective: 04-01 Topic Area: Ledger accounts and financial statements AACSB: Reflective thinking AICPA: BB Critical thinking AICPA: FN Measurement Blooms: Understand Level of Difficulty: 1 Easy Feedback: Cost of goods sold,transportation-out,selling expense,loss on the sale of land,and sales will all appear on the income statement. -Which accounts would appear on the balance sheet?

If goods are shipped FOB destination,who is responsible for the shipping costs?

Gross margin percentage: Company A: $32,000/$80,000 = 40% Company B: $45,000/$180,000 = 25% Company C: $48,000/$120,000 = 40% Company D: $40,000/$100,000= 40% The discount retailer would have a lower gross margin percentage. -Gomez Co.had beginning inventory of $2,400 and ending inventory of $1,200.The cost of goods sold was $9,600.Based on this information,Gomez Co.must have purchased inventory amounting to:

Yowell Company granted a sales discount of $360 to a customer when it collected the amount due on account.Yowell uses the perpetual inventory system.Which of the following answers reflects the effects on the financial statements of only the discount?

Xavier Co.sold goods with the terms 2/15,n/30.What do the terms mean?

Gross margin percentage: Company A: $32,000/$80,000 = 40% Company B: $45,000/$180,000 = 25% Company C: $48,000/$120,000 = 40% Company D: $40,000/$100,000= 40% The discount retailer would have a lower gross margin percentage. -Aaron Company uses the periodic inventory cost flow method.If Aaron's ending inventory is understated due to an accounting error,what is the effect on net income and the ending balance of retained earnings?

A company using the perpetual inventory method paid cash for a transportation-in cost.Which of the following choices reflects the effects of this event on the financial statements?

The following T-accounts are from the ledger of Hill Company.Hill uses the periodic inventory system. Which of the following is true about Hill Company?

Melbourne Company sold merchandise that it had purchased with a list price of $3,300 and subject to terms of 2/10,n/30.Assuming that Melbourne paid for the merchandise during the discount period,the cost of goods sold for this transaction would be $2,970.

Faust Company uses the perpetual inventory method.Faust sold goods that cost $2,300 for $3,600.If the sale was made on account,the net effect of the sale will:

A company using a perpetual inventory system treats transportation-out as a selling and administrative expense.

Middleton Company uses the perpetual inventory method.The company purchased an item of inventory for $130 and sold the item to a customer for $200.What effect will the sale have on the company's inventory account?

For a company that uses a perpetual inventory system,a physical count of the inventory can reveal the amount of inventory shrinkage the company has experienced.

Use the following for questions Assume the perpetual inventory method is used. 1) The company purchased $12,500 of merchandise on account under terms 2/10,n/30. 2) The company returned $1,200 of merchandise to the supplier before payment was made. 3) The liability was paid within the discount period. 4) All of the merchandise purchased was sold for $18,800 cash. -What effect will the return of merchandise to the supplier have on the accounting equation?

Which of the following is considered a period cost?

The term "FOB shipping point" indicates that the seller is responsible for transportation costs.