Question 1

American Importers reports net income of $50,000 and cost of goods sold of $450,000. If the company's gross profit rate was 40%, net sales were

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Question 2

Prepare the journal entries to record the following transactions on Markowitz Company's books using a perpetual inventory system. On February 6, Markowitz Company sold $105,000 of merchandise to the Lyman Company, terms 2/10, net /30. The cost of the merchandise sold was $70,000. On February 8, the Lyman Company returned $14,000 of the merchandise purchased on February 6. The cost of the merchandise returned was $7,000. On February 16 Markowitz Company received the balance due from the Lyman Company.

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Question 3

On October 1, the Kile Bicycle Store had an inventory of 20 ten speed bicycles at a cost of $150 each. During the month of October the following transactions occurred. Assume Kile uses a perpetual inventory system.
Oct. 4 Purchased 180 bicycles at a cost of $145 each from the Nixon Bicycle Company, terms 2/10, n/30.
5 Paid freight of $1,000 on the October 4 purchase.
6 Sold 10 bicycles from the October 1 inventory to Team America for $250 each, terms 2/10, n/30.
7 Received credit from the Nixon Bicycle Company for the return of 8 defective bicycles.
13 Issued a credit memo to Team America for the return of a defective bicycle.
14 Paid Nixon Bicycle Company in full, less discount.
Instructions
Prepare the journal entries to record the transactions assuming the company uses a perpetual inventory system.

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Question 4

Menke Company is a furniture retailer and uses the perpetual inventory system. On January 14, 2014, Menke purchased merchandise inventory at a cost of $45,000. Credit terms were 2/10, n/30. The inventory was sold on account for $60,000 on January 21, 2014. Credit terms were 1/10, n/30. The accounts payable was settled on January 23, 2014, and the accounts receivables were settled on January 30, 2014. Prepare journal entries to record each of these transactions.

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Question 5

Turner Corporation returned $150 of goods originally purchased on credit from Morgan Industries. Using the periodic Inventory approach, Turner would record this transaction as:

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Question 6

Ramos Company receives a payment on account from Martinez Industries. Based on the original sale of $8,000 using the periodic inventory approach, Ramos honors the 3% cash discount and records the payment. Which of the following is the correct entry for Ramos to record?

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Question 7

On September 4, Roberta's Knickknacks buys merchandise on account from Dolan Company. The selling price of the goods is $900 and the cost of goods is $600. Both companies use the perpetual inventory systems Journalize the transactions on the books of both companies.

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Question 8

Horner Corporation reported net sales of $150,000, cost of goods sold of $96,000, operating expenses of $35,000, other expenses of $10,000, net income of $9,000. Calculate the following values. 1. Profit margin. 2. Gross profit rate.

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Question 9

Sue Cole is a new accountant with Simon Company. Simon purchased merchandise on account for $9,000. The credit terms are 1/10, n/30. Sue has talked with the company's banker and knows that she could earn 6% on any money invested in the company's savings account.
Instructions
(a) Should Sue pay the invoice within the discount period or should she keep the $9,000 in the savings account and pay at the end of the credit period? Support your recommendation with a calculation showing which action would be best.
(b) If Sue forgoes the discount, it may be viewed as paying an interest rate of 1% for the use of $9,000 for 20 days. Calculate the annual rate of interest that this is equivalent to.

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Question 10

June 4 Black Company purchased $9,000 worth of merchandise, terms n/30 from Hayes Company. The cost of the merchandise was $6,300.
12 Black returned $500 worth of goods to Hayes for full credit. The goods had a cost of $350 to Hayes.
12 Black paid the account in full.
Instructions
Prepare the journal entries to record these transactions in (a) Black's records and (b) Hayes' records. Assume use of the perpetual inventory system for both companies.

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Question 11

Presented here are the components in Rowland Company's income statement. Determine the missing amounts.

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Question 12

United Services and Supplies reports net income of $60,000 and cost of goods sold of $360,000. US&S's gross profit rate was 40%, net sales were

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Question 13

Bazil Company purchased merchandise on account from Office Suppliers for $62,000, with terms of 1/10, n/30. During the discount period, Bazil returned some merchandise and paid $59,400 as payment in full. Bazil uses a perpetual inventory system. Prepare the journal entries that Bazil Company made to record the:
(1) purchase of merchandise.
(2) return of merchandise.
(3) payment on account.
(b) Weaver Company sold merchandise to Moore Company on account for $84,000 with credit terms of ?/10, n/30. The cost of the merchandise sold was $63,000. During the discount period, Moore Company returned $4,000 of merchandise and paid its account in full (minus the discount) by remitting $78,400 in cash. Both companies use a perpetual inventory system. Prepare the journal entries that Weaver Company made to record the:
(1) sale of merchandise.
(2) return of merchandise.
(3) collection on account.

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Question 14

Lovett Company provides this information for the month of November, 2014: sales on credit $140,000; cash sales $50,000; sales discount $2,000; and sales returns and allowances $8,000. Prepare the sales revenues section of the income statement based on this information.

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Question 15

Assume that Mitchell Company uses a periodic inventory system and has these account balances: Purchases $620,000; Purchase Returns and Allowances $25,000; Purchases Discounts $11,000; and Freight-In $19,000; beginning inventory of $45,000; ending inventory of $55,000; and net sales of $750,000. Determine the amounts to be reported for cost of goods sold and gross profit.

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Question 16

Crowder Corporation recorded the return of $200 of goods originally sold on credit to Discount Industries. Using the periodic inventory approach, Crowder would record this transaction as:

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Question 17

Assume that Mitchell Company uses a periodic inventory system and has these account balances: Purchases $570,000; Purchase Returns and Allowances $14,000; Purchases Discounts $9,000; and Freight-In $15,000. Determine net purchases and cost of goods purchased.

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Question 18

On September 1, Pennington Supply had an inventory of 20 backpacks at a cost of $25 each. The company uses a perpetual inventory system. During September, the following transactions and events occurred.
Sept. 4 Purchased 50 backpacks at $25 each from Sievert, terms 2/10, n/30.
6 Received credit of $100 for the return of 4 backpacks purchased on September 4 that were defective.
9 Sold 25 backpacks for $40 each to Lilly Books, terms 2/10, n/30.
13 Sold 15 backpacks for $40 each to Stoner Office Supply, terms n/30.
14 Paid Sievert in full, less discount.
Instructions
Journalize the September transactions for Pennington Supply.

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Question 19

This information relates to Sherper Co.
1. On April 5 purchased merchandise from Newport Company for $22,000, terms 2/10, n/10.
2. On April 6 paid freight costs of $900 on merchandise purchased from Newport.
3. On April 7 purchased equipment on account for $26,000.
4. On April 8 returned some of April 5 merchandise to Newport Company which cost $2,000.
5. On April 15 paid the amount due to Newport Company in full.
Instructions
(a) Prepare the journal entries to record the transactions listed above on the books of Sherper Co. Sherper Co. uses a perpetual inventory system.
(b) Assume that Sherper Co. paid the balance due to Newport Company on May 4 instead of April 15. Prepare the journal entry to record this payment.

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1. On...

Question 20

Erin Corporation purchases $500 of merchandise on credit. Using the periodic inventory approach, Erin would record this transaction as:

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Quiz 5: Merchandising Operations and the Multiple-Step Income Statement

American Importers reports net income of $50,000 and cost of goods sold of $450,000. If the company's gross profit rate was 40%, net sales were

Turner Corporation returned $150 of goods originally purchased on credit from Morgan Industries. Using the periodic Inventory approach, Turner would record this transaction as:

Ramos Company receives a payment on account from Martinez Industries. Based on the original sale of $8,000 using the periodic inventory approach, Ramos honors the 3% cash discount and records the payment. Which of the following is the correct entry for Ramos to record?

On September 4, Roberta's Knickknacks buys merchandise on account from Dolan Company. The selling price of the goods is $900 and the cost of goods is $600. Both companies use the perpetual inventory systems Journalize the transactions on the books of both companies.

Horner Corporation reported net sales of $150,000, cost of goods sold of $96,000, operating expenses of $35,000, other expenses of $10,000, net income of $9,000. Calculate the following values. 1. Profit margin. 2. Gross profit rate.

Presented here are the components in Rowland Company's income statement. Determine the missing amounts.

United Services and Supplies reports net income of $60,000 and cost of goods sold of $360,000. US&S's gross profit rate was 40%, net sales were

Lovett Company provides this information for the month of November, 2014: sales on credit $140,000; cash sales $50,000; sales discount $2,000; and sales returns and allowances $8,000. Prepare the sales revenues section of the income statement based on this information.

Crowder Corporation recorded the return of $200 of goods originally sold on credit to Discount Industries. Using the periodic inventory approach, Crowder would record this transaction as:

Assume that Mitchell Company uses a periodic inventory system and has these account balances: Purchases $570,000; Purchase Returns and Allowances $14,000; Purchases Discounts $9,000; and Freight-In $15,000. Determine net purchases and cost of goods purchased.

Erin Corporation purchases $500 of merchandise on credit. Using the periodic inventory approach, Erin would record this transaction as: