Question 1

An amount that a merchandiser earns by selling its inventory is known as sales revenue or sales.

Accepted Answer

Sales revenue refers to the income earned by a merchandiser from the sale of its inventory.

Question 2

Under the perpetual inventory system,the journal entry to record cost of goods sold:

Accepted Answer

Under the perpetual inventory system, the cost of goods sold is recorded by debiting the Cost of Goods Sold account and crediting the Merchandise Inventory account.

Question 3

Under the perpetual inventory system,two journal entries are used to record the sales of merchandise.One entry records the Sales Revenue and another entry records the Cost of Goods Sold.

Accepted Answer

When merchandise is sold under the perpetual inventory system, two journal entries are made: one to record the Sales Revenue and the other to record the Cost of Goods Sold. This is done to properly account for the revenue and cost associated with the sale of merchandise.

Question 4

Which of the following is true of freight in?

Accepted Answer

Freight in refers to the transportation cost incurred by the company for receiving goods from suppliers. Therefore, it is the transportation cost on purchases. It is not an administrative expense or a selling expense.

Question 5

Portian Merchandisers has purchased merchandise on account and paid $450 for freight in.Give the journal entry for freight paid.(Assume a perpetual inventory system. )

Accepted Answer

The answer of Portian Merchandisers has purchased merchandise on account...

Question 6

Landon Jewelers uses the perpetual inventory system.On April 2,Landon sold merchandise with a cost of $3,500 for $8,000 to a customer on account with terms of 1/15,n/30.The journal entry to record the cost of goods sold would be:

Accepted Answer

The correct entry for recording the cost of goods sold in a perpetual inventory system is to debit Cost of Goods Sold and credit Merchandise Inventory for the cost of the merchandise sold.

Question 7

VB Specialty Foods,a grocery merchandiser,purchased goods and paid transportation to bring them to the company warehouse.The transportation cost is known as ________.

Accepted Answer

The transportation cost paid by VB Specialty Foods to bring goods to their warehouse is known as "freight in". Freight in cost is included in the cost of goods purchased by the company and it is not considered a selling expense or cost of goods sold. Freight out is the transportation cost incurred by the company to send goods to customers, and cost of goods sold is the expense related to the direct production or acquisition of goods.

Question 8

Freight out is an addition to the Merchandise Inventory account if the seller uses the perpetual inventory system.

Accepted Answer

Freight out, or shipping costs incurred by the seller to deliver goods to customers, is considered a selling expense and is not added to the Merchandise Inventory account. In the perpetual inventory system, inventory costs include the cost of goods purchased including any freight-in (shipping costs to receive goods) but not freight out.

Question 9

A company purchased inventory for $73,000 from a vendor on account,FOB shipping point,with terms of 4/10,n/30.The company paid the shipper $1,500 cash for freight in.The company paid the vendor nine days after the sale.If there was no beginning inventory,the cost of inventory would be ________.(Assume a perpetual inventory system. )

Accepted Answer

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Question 10

A company purchased inventory for $4,000 from a vendor on account,FOB shipping point,with terms of 3/15,n/30.The company paid $100 cash for freight in.The entry to record payment of invoice within 3 days by the purchaser would include ________.(Assume a perpetual inventory system. )

Accepted Answer

The company receives a 3% discount on the $4,000 purchase, reducing the payable to $3,880. The freight cost of $100 is added to inventory, and the discount of $120 ($4,000 x 3%) is credited to inventory, resulting in a credit to cash for $3,880.

Question 11

A company sold merchandise with a cost of $231 for $480 on account.The seller uses the perpetual inventory system.The entry to record the cost of merchandise sold would include ________.

Accepted Answer

The entry to record the cost of merchandise sold in a perpetual inventory system includes a debit to Cost of Goods Sold and a credit to Merchandise Inventory for the cost of the merchandise sold, which in this case is $231. Therefore, option C is the correct choice. Options A and B are incorrect because they do not account for the cost of goods sold, and options D is incorrect because it incorrectly debits Merchandise Inventory for the selling price instead of the cost.

Question 12

The term "freight out" refers to ________.

Accepted Answer

Freight out refers to transportation costs on sales, which are costs incurred when delivering goods to customers. These costs are typically included in the selling price of the goods or shown as a separate charge on the invoice.

Question 13

WAXS-D,merchandisers of musical instruments,has provided the following details: $$\begin{array} { | l | l | r | } 
\hline \text { Mar. 5 } & \text { Inventory purchased on account } & \$ 725,000 \
\hline \text { Mar. 8 } & \text { Freight in } & 40,000 \
\hline \text { Mar. 13 } & \text { Purchase returns } & 65,000 \
\hline \text { Mar. 14 } & \text { Allowances by vendor } & 10,000 \
\hline \text { Mar. 20 } & \text { Payment made to vendor for purchases on March 5 } & ? \
\hline
\end{array}$$ Credit terms are: 4/20,n/45,FOB shipping point.Calculate the net cost of inventory purchased assuming that there are no other inventory-related transactions during the month.

Accepted Answer

The answer of WAXS-D,merchandisers of musical instruments,has provided the following...

Question 14

Owens Jewelers uses the perpetual inventory system.On April 2,Owens sold merchandise with a cost of $2,500 for $7,000 to a customer on account with terms of 2/15,n/30.Which of the following journal entries correctly records the sales revenue?

Accepted Answer

The correct journal entry for recording sales revenue is to debit Accounts Receivable and credit Sales Revenue for the amount of the sale, which is $7,000.

Question 15

Reid Art Supply Company uses a perpetual inventory system.The company had the following transactions during August 2017:
Aug.5: Purchased $2,900 of merchandise on account.Freight and credit terms were FOB shipping point,3/15,n/60.
Aug.9: Paid transportation costs of $440 for the Aug.5 purchase.
Aug.10: Returned $600 of defective merchandise that had been purchased on Aug.5.
Aug.15: Paid for the merchandise purchased on Aug.5.
Give journal entries for August 10 and 15.

Accepted Answer

The answer of Reid Art Supply Company uses a perpetual...

Question 16

FOB destination refers to a situation where title to goods while in transit belongs to the ________.

Accepted Answer

In FOB destination terms, the seller retains ownership and responsibility for the goods until they are delivered to the buyer's specified location, meaning the title to the goods while in transit belongs to the seller.

Question 17

A company has purchased inventory and received an invoice that requires the buyer to pay the transportation costs for delivering the merchandise.The terms are ________.

Accepted Answer

FOB shipping point means that the buyer is responsible for the transportation costs and risks from the shipping point.

Question 18

A merchandiser,following the perpetual inventory system,has the following transactions during August,2017:
 $\begin{array}{lll}
\text { Date } & \text { Transaction } & \text { Amount } \
\text { Aug. 5 } & \text { Purchased inventory on account } & \$ 300,000 \
\text { Aug. } 9 & \text { Paid for transportation of goods purchased } & 25,000 \
\text { Aug. 10 } & \text { Returned defective merchandise to the seller } & 20,000 \
\text { Aug. 15 } & \text { Paid for goods purchased on August 5 } & ?
\end{array}$
 Credit terms of invoice are 2/15,n/45.Give journal entries for the above transactions.

Accepted Answer

The answer of A merchandiser,following the perpetual inventory system,has the...

Question 19

A company purchased inventory for $3,000 from a vendor on account,FOB shipping point,with terms of 3/10,n/30.The company paid the shipper $300 cash for freight in.The company then returned damaged goods worth $300.The invoice was then paid eight days after the purchase.Assuming that there was no beginning inventory balance,the cost of inventory would be ________.(Assume a perpetual inventory system. )

Accepted Answer

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Question 20

Under which of the following terms will the buyer be required to pay transportation costs?

Accepted Answer

The answer of Under which of the following terms will...

Quiz 5: Merchandising Operations