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Exam 4: Reporting and Analyzing Merchandising Operations

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Question 41

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A company's cost of goods sold was $4,000.Determine net purchases and ending inventory given goods available for sale were $11,000 and beginning inventory was $5,000.

A) Net Purchases: $15,000; Ending Inventory: $7,000
B) Net Purchases: $10,000; Ending Inventory: $15,000
C) Net Purchases: $9,000; Ending Inventory: $6,000
D) Net Purchases: $6,000; Ending Inventory: $7,000
E) Net Purchases: $16,000; Ending Inventory: $20,000

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Question 42

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A company has sales of $1,500,000,sales discounts of $102,000,sales returns and allowances of $123,000,shipping charges of $15,000,sales commissions of $34,000,net income totaled $263,500,and cost of goods sold of $420,000.What is the gross profit/margin for the period?

A) $ 806,000
B) $1,031,000
C) $1,182,000
D) $1,080,000
E) $ 855,000

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Question 43

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Match the following terms with the appropriate definition

List the steps of the operating cycle for a merchandiser with credit sales.

A company purchased $1,800 of merchandise on December 5.On December 7,it returned $200 worth of merchandise.On December 8,it paid the balance in full,taking a 2% discount.The amount of the cash paid on December 8 equals:

Distinguish between selling expenses and general and administrative expenses.

When preparing the unadjusted trial balance in a periodic inventory system,the amount that appears as Merchandise Inventory is the ending inventory amount.

Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year: $\begin{array}{c} \text { Yakima's Sporting Goods}\\ \text { Adjusted Trial Balance}\\ \text { December 31}\\\begin{array}{|l|r|r|}\hline& \mathrm{Dr} & \mathrm{Cr} \\\hline \text { Cash } & \$ 67,400 & \\\hline \text { Accounts receivable } & 46,000 & \\\hline \text { Merchandise inventory } & 50,000 & \\\hline \text { Office supplies } & 800 & \\\hline \text { Accounts payable } & & 16,000 \\\hline \text { Salaries payable } & & 850 \\\hline \text { Common stock } & & 50,000 \\\hline \text { Retained earnings } & & 75,530 \\\hline \text { Dividends } & 5,000 & \\\hline \text { Sales } & & 500,000 \\\hline \text { Sales returns \& allowances } & 4,500 & \\\hline \text { Sales discounts } & 4,250 & \\\hline \text { Cost of goods sold } & 382,450 & \\\hline \text { Sales salaries expense } & 44,000 & \\\hline \text { Advertising expense } & 8,150 & \\\hline \text { Office salaries expense } & 24,325 & \\\hline \text { Office supplies expense } & 450 & \\\hline \text { Interest expense } & \underline{5,055} & \\\hline \text { Totals } & \$ 642,380 & \$ 642,380 \\\hline\end{array}\end{array}$ Prepare the closing entries at December 31 for the current year.

The year-end adjusted trial balance of ABC Supply for the current year is shown below: $\begin{array}{c} \text {ABC SUPPLY}\\ \text {Adjusted Trial Balance}\\ \text {December 31}\\\begin{array}{|l|r|r|}\hline \text { Cash } & \$ 1,500 & \\\hline \text { Office supplies } & 500 & \\\hline \text { Merchandise inventory } & 11,000 & \\\hline \text { Store equipment } & 18,000 &\\\hline \text { Accum Depr - store equipment } & & \$ 3,000 \\\hline \text { Accounts payable } & & 6,000 \\\hline \text { Common stock } & & 10,000 \\\hline \text { Retained earnings } & & 40,000\\\hline \text { Dividends } & 22,000 & \\\hline \text { Sales } & & 60,500 \\\hline \text { Cost of goods sold } & 48,000 & \\\hline \text { Depreciation expense - Store equipment } & 1,000 &\\\hline \text { Office supplies expense } & 1,500 & \\\hline \text { Salaries expense } & 14,000 & \\\hline \text { Rent expense } & 2,000 & \\\hline & \$ 119,500 & \$ 119,500 \\\hline\end{array}\end{array}$ Prepare closing entries at December 31 for the current year.

If a company sells merchandise with credit terms 2/10 n/60,the credit period is 10 days and the discount period is 60 days.

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

Purchase allowances refer to merchandise a buyer acquires but then returns to the seller.

Expenses that support the overall operations of a business and include the expenses relating to accounting,human resource management and financial management are called:

Describe the key attributes of inventory for a merchandising company.

Herald Company had sales of $135,000,sales discounts of $2,000 and sales returns of $3,200.Herald Company's net sales equals:

Scuba Company had net income on the current year's income statement in the amount of $800,000,other expense in the amount of $400,000 and a gross profit ratio of 58%,what was the amount of net sales on the income statement?

Quick assets include cash,inventory and current receivables.

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

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

A company has sales of $2,530,000,sales discounts of $200,000,sales returns and allowances of $323,000,shipping charges of $115,000,sales commissions of $234,000,net income totaled $863,500,and cost of goods sold of $1,012,000.What is the gross profit/margin for the period?