Question 1

A company sold merchandise with a cost of $213 for $440 on account.The seller uses the perpetual inventory system.The entry to record the cost of merchandise sold would include ________.

Accepted Answer

To record the cost of merchandise sold, the entry should include a debit to Cost of Goods Sold (expense account) and a credit to Merchandise Inventory (asset account) for the cost of the merchandise sold, which is $213. This reduces the inventory balance and records the expense of goods sold. The option A and B are incorrect as they do not reflect the cost of merchandise sold. Option D is incorrect as it is the opposite of what should be recorded.

Question 2

An amount that a business earns from selling merchandise inventory is known as sales revenue or sales.

Accepted Answer

Sales revenue is the income generated by a business from the sale of goods or services to customers. It is also commonly referred to as simply "sales."

Question 3

The net cost of merchandise inventory purchased ________.

Accepted Answer

The net cost of merchandise inventory purchased represents the actual cost of merchandise purchased, which includes all costs associated with acquiring the inventory, including both purchase price and any other costs such as freight in and purchase allowances. Thus, option A is incorrect as it states that the net cost of merchandise inventory purchased includes freight out, which is incorrect as freight out refers to the cost of shipping merchandise to customers, and is not a part of the cost of acquiring inventory. Option B is incorrect as it states that the net cost of merchandise inventory purchased excludes freight in, which is incorrect as freight in is a part of the cost of acquiring inventory and is included in the net cost of merchandise inventory purchased. Option C is also incorrect as it states that the net cost of merchandise inventory excludes purchase allowances, which is incorrect as purchase allowances are a reduction in the cost of inventory and are subtracted from the gross cost of merchandise purchased to arrive at the net cost of merchandise inventory purchased.

Question 4

When a company that uses the perpetual inventory system sells goods for cash,the journal entry to record cost of goods sold is:

Accepted Answer

The answer of When a company that uses the perpetual...

Question 5

Regarding the Cost of Goods Sold account,which of the following statements is incorrect?

Accepted Answer

B)Cost of Goods sold is an expense account.

Question 6

Forever Jewelers uses the perpetual inventory system.On April 2,Forever sold merchandise with a cost of $4,500 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 answer of Forever Jewelers uses the perpetual inventory system.On...

Question 7

When a sale is made on account,Accounts Receivable is debited.

Accepted Answer

Accounts Receivable is debited when a sale is made on account because it represents the amount owed to the company by the customer.

Question 8

Cost of Goods Sold is based on the company's cost,not the retail price.

Accepted Answer

Cost of Goods Sold (COGS) is the cost incurred by a company to acquire or produce the goods that were sold during a specific period. It is calculated based on the cost of goods, not the retail price.

Question 9

Journalize the following transaction for a merchandiser that uses the perpetual inventory system.
Sold goods to A.Pitt,on account,$2,500 (cost,$1,750).Omit explanations.

Accepted Answer

The answer of Journalize the following transaction for a merchandiser...

Question 10

In a perpetual inventory system,the Cost of Goods Sold account is debited at the time of each sale.

Accepted Answer

In a perpetual inventory system, the Cost of Goods Sold account is debited at the time of each sale to reflect the cost of the goods sold. This system allows for real-time tracking of inventory and cost of sales.

Question 11

A merchandiser sold goods on account to Customer A for $8,000 with terms of 2/10,n/30.If the payment is received after the discount period,Accounts Receivable is decreased by $8,000.

Accepted Answer

A merchandiser sold goods to Customer A for $8,000 with terms of 2/10,n/30.If the payment is received after the discount period,Accounts Receivable is decreased by $7,840.

Question 12

If a customer does not pay within the discount period,the seller records the discount lost as in increase in Sales Revenue.

Accepted Answer

If a customer does not pay within the discount period,the seller records the discount lost as Sales Discounts Forfeited.

Question 13

Journalize the following transaction for a merchandiser that uses the perpetual inventory system.
Sold goods for cash,$1,200 (cost $750).Omit explanations.

Accepted Answer

The answer of Journalize the following transaction for a merchandiser...

Question 14

ABC Electrical Supply Company purchased $560,000 of inventory.Goods of $35,000 were returned.ABC received an early discount of $55,000 and paid freight in of $15,000 and freight out of $20,000.Compute the net cost of inventory purchased.Label your work and show all computations.

Accepted Answer

The answer of ABC Electrical Supply Company purchased $560,000 of...

Question 15

When a perpetual inventory system is used,at the time of each sale an entry to record an expense and an increase in Merchandise Inventory must be made.

Accepted Answer

When a perpetual inventory system is used,at the time of each sale an entry to record an expense and a reduction in Merchandise Inventory must be made.

Question 16

Landon Jewelers uses the perpetual inventory system.On April 2,Landon sold merchandise with a cost of $2,500 for $7,000 to a customer on account with terms of 3/15,n/30.The journal entry to record the cost of goods sold would be:

Accepted Answer

The answer of Landon Jewelers uses the perpetual inventory system.On...

Question 17

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

Accepted Answer

This is because under the perpetual inventory system, the cost of goods sold is recognized at the time of sale, and a separate entry is made to record the sales revenue.

Question 18

A reduction in the amount of revenue earned on sales for early payment is known as a sales discount.

Accepted Answer

A sales discount reduces the amount of revenue earned on sales for early payment.

Question 19

The Sales Discounts Forfeited account ________.

Accepted Answer

The Sales Discounts Forfeited account represents the discount lost when a customer does not pay within the discount period. It is not a contra Sales Revenue account, does not represent additional sales revenue, and is not a balance sheet account.

Question 20

Sales are recorded at the amount of the sale less any sales discounts.

Accepted Answer

Sales are recorded at the amount of the sale less any sales discounts.

Quiz 5: Merchandising Operations

A company sold merchandise with a cost of $213 for $440 on account.The seller uses the perpetual inventory system.The entry to record the cost of merchandise sold would include ________.

An amount that a business earns from selling merchandise inventory is known as sales revenue or sales.

The net cost of merchandise inventory purchased ________.

When a company that uses the perpetual inventory system sells goods for cash,the journal entry to record cost of goods sold is:

Regarding the Cost of Goods Sold account,which of the following statements is incorrect?

Forever Jewelers uses the perpetual inventory system.On April 2,Forever sold merchandise with a cost of $4,500 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?

When a sale is made on account,Accounts Receivable is debited.

Cost of Goods Sold is based on the company's cost,not the retail price.

Journalize the following transaction for a merchandiser that uses the perpetual inventory system. Sold goods to A.Pitt,on account,$2,500 (cost,$1,750).Omit explanations.

In a perpetual inventory system,the Cost of Goods Sold account is debited at the time of each sale.

A merchandiser sold goods on account to Customer A for $8,000 with terms of 2/10,n/30.If the payment is received after the discount period,Accounts Receivable is decreased by $8,000.

If a customer does not pay within the discount period,the seller records the discount lost as in increase in Sales Revenue.

Journalize the following transaction for a merchandiser that uses the perpetual inventory system. Sold goods for cash,$1,200 (cost $750).Omit explanations.

ABC Electrical Supply Company purchased $560,000 of inventory.Goods of $35,000 were returned.ABC received an early discount of $55,000 and paid freight in of $15,000 and freight out of $20,000.Compute the net cost of inventory purchased.Label your work and show all computations.

When a perpetual inventory system is used,at the time of each sale an entry to record an expense and an increase in Merchandise Inventory must be made.

Landon Jewelers uses the perpetual inventory system.On April 2,Landon sold merchandise with a cost of $2,500 for $7,000 to a customer on account with terms of 3/15,n/30.The journal entry to record the cost of goods sold would be:

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

A reduction in the amount of revenue earned on sales for early payment is known as a sales discount.

The Sales Discounts Forfeited account ________.

Sales are recorded at the amount of the sale less any sales discounts.