Question 1

The amount of costs transferred from the Inventory account to the Cost of Goods Sold account during January was:

Accepted Answer

The Cost of Goods Sold account represents the expenses incurred to produce or purchase the goods that were sold during the period. In order to calculate the cost of goods sold, the beginning inventory is added to the cost of purchases made during the period, and then the ending inventory is subtracted. Since there is no information given about the beginning and ending inventory levels, we can assume that the company started the month with no inventory and purchased $55,000 worth of goods during the month. Therefore, the amount of costs transferred from the Inventory account to the Cost of Goods Sold account during January was $55,000.

Question 2

The amount of costs transferred from the Inventory account to the Cost of Goods Sold account during January was:

Accepted Answer

The Cost of Goods Sold account represents the expenses incurred to produce or purchase the goods that were sold during the period. In order to calculate the cost of goods sold, the beginning inventory is added to the cost of purchases made during the period, and then the ending inventory is subtracted. Since there is no information given about the beginning and ending inventory levels, we can assume that the company started the month with no inventory and purchased $55,000 worth of goods during the month. Therefore, the amount of costs transferred from the Inventory account to the Cost of Goods Sold account during January was $55,000.

Question 3

Marietta Corporation uses a perpetual inventory system. All of its sales are made on account. The company sells merchandise costing $3,000 at a sales price of $4,300. In recording this transaction, Marietta will make all of the following entries except:

Accepted Answer

The answer of Marietta Corporation uses a perpetual inventory system....

Question 4

Phillips Co. is an office supply store. The company uses a perpetual inventory system, records purchases at net cost, and records sales revenue at full invoice price.
Record the following transactions in the company's general journal. To conserve space, you may omit the written explanations which normally should accompany the entries.
July 1 Purchased four Lorac copying machines on account from Lorac Corp. Total invoice price was $2,500 per machine ($10,000 total); terms of 2/10, n/30. These machines are intended for resale.
3 Found one of the Lorac copiers to be defective and returned it to Lorac, thus reducing the amount owed.
9 Sold one of the Lorac copiers to Morris Realty. The sales price was $3,500, terms 5/10, n/60.
10 Paid the remaining amount owned to Lorac Corp., less the allowable discount.
19 Received full payment from Morris, less the allowable discount.

Accepted Answer

The answer of Phillips Co. is an office supply store....

Question 5

Prepare journals entries for the following, assuming the company uses a perpetual inventory method and records purchases at their net amounts.

Accepted Answer

The answer of Prepare journals entries for the following, assuming...

Question 6

Fashion House uses a perpetual inventory system. At the beginning of the year, inventory amounted to $50,000. During the year, the company purchased merchandise for $230,000, and sold merchandise costing $245,000. A physical inventory taken at year-end indicated shrinkage losses of $4,000. Prior to recording these shrinkage losses, the year-end balance in the company's Inventory account was:

Accepted Answer

The answer of Fashion House uses a perpetual inventory system....

Question 7

If management wants to know the cost and quantity of merchandise on hand at all times, the business will probably:

Accepted Answer

Maintaining an inventory subsidiary ledger allows the business to track the cost and quantity of merchandise on hand at all times. This ledger provides detailed information on individual items in inventory, including the date of purchase, cost, quantity, and any adjustments made for returns, discounts, or damaged goods. This information is used to prepare accurate financial statements and make informed decisions about purchasing, pricing, and inventory management. A periodic inventory system would only provide a snapshot of inventory at specific points in time, and taking a complete physical inventory each day would be time-consuming and expensive. Debiting all purchases directly to the Cost of Goods Sold account would not provide any information on the quantity of merchandise on hand.

Question 8

The balance in the Inventory account at January 31 was:

Accepted Answer

The inventory account was debited with $235,000 for purchases and credited with $135,000 for sales returns and allowances, leaving a balance of $100,000. This balance was then increased by the $15,000 inventory count adjustment, making the balance in the inventory account at January 31 $115,000.

Question 9

The balance in the Inventory account at January 31 was:

Accepted Answer

The correct balance in the Inventory account at January 31 is $95,000, as indicated by the choice provided.

Question 10

The total debited to the Inventory account during January was:

Accepted Answer

The total debited to the Inventory account during January was $35,000. This is because the beginning inventory was $20,000, and purchases during January were $15,000.

Question 11

A customer purchased merchandise for $450 which cost the seller $200. The customer was dissatisfied with some of the goods and thus returned $100 worth and received a cash refund.
(a) What journal entries should the seller make when the merchandise is sold and at the time of the return? Assume that the seller uses a perpetual inventory system.
(b) If the seller uses a periodic inventory system, what entries would be made?

Accepted Answer

The answer of A customer purchased merchandise for $450 which...

Question 12

Using gross profit rates Explain how the gross profit rate for a particular product is determined. How would you expect the manager of a large department store to use these gross profit rates in deciding which products to feature in the store's window displays and in determining the location of various types of merchandise within the store? Explain.

Accepted Answer

The answer of Using gross profit rates Explain how the...

Question 13

The total debited to the Inventory account during January was:

Accepted Answer

The answer of The total debited to the Inventory account...

Question 14

At the end of last year, Baron's Bazaar had merchandise costing $381,000 in inventory.
During January of the current year, the company purchased merchandise costing $133,500, and sold merchandise which it had purchased at a total cost of $109,300.
a. Assume that Baron's Bazaar uses a perpetual inventory system.
(1) The total amount debited to the Inventory account during January was:
$________________
(2) The balance in the Inventory account at January 31 was:
$________________
(3) The amount of costs transferred from the Inventory account to the Cost of Goods Sold account during January was:
$________________
b. Assume that Baron's Bazaar uses a periodic inventory system and takes a physical inventory only at year-end (December 31). (Note: $0 may be an appropriate answer to one or more of the following questions.)
(1) The total amount debited to the Inventory account during January was:
$________________
(2) The balance in the Inventory account at January 31 was:
$________________
(3) The amount of costs transferred from the Inventory account to the Cost of Goods Sold account during January was:
$________________

Accepted Answer

The answer of At the end of last year, Baron's...

Question 15

Which of the following statements about merchandising activities is true? (More than one answer may be correct)

Accepted Answer

The answer of Which of the following statements about merchandising...

Question 16

Mark and Amanda Carter own an appliance store and a restaurant. The appliance store sells merchandise on a 12-month installment plan; the restaurant sells only for cash. (More than one of the following answers may be correct.)

Accepted Answer

D  The appliance store has a longer operating cycle due to the installment plan, and both businesses likely have subsidiary ledgers for accounts payable to manage their payables efficiently.

Question 17

A periodic inventory system eliminates the need for:

Accepted Answer

In a periodic inventory system, the cost of merchandise sold is not recorded as sales occur. Instead, the cost of merchandise sold is determined at the end of the accounting period through a physical inventory count and calculation of the cost of goods sold. Therefore, choice C is the correct answer as it correctly identifies the elimination of a specific accounting task in a periodic inventory system. Choices A and B are not accurate because even in a periodic inventory system, taking an annual physical inventory may still be necessary, and revenue from sales transactions still needs to be recorded.

Question 18

Prior to taking a physical inventory at year-end, the perpetual inventory records of Athena Designs showed an inventory of $26,000, sales of $358,000, and a cost of goods sold of $215,000. The year-end physical inventory indicated merchandise on hand costing $24,000. The company's gross profit for the year was:

Accepted Answer

To find the gross profit, we need to first calculate the cost of goods sold. We can do that using the perpetual inventory method:

Beginning Inventory + Purchases - Ending Inventory = Cost of Goods Sold
$26,000 + Purchases - $24,000 = $215,000
Purchases = $213,000

Next, we can find the gross profit by subtracting the cost of goods sold from the sales:

Gross Profit = Sales - Cost of Goods Sold
Gross Profit = $358,000 - $215,000
Gross Profit = $143,000

Therefore, the company's gross profit for the year was $141,000 (choice C).

Question 19

Which of the following businesses is most likely to use a periodic inventory system?

Accepted Answer

The answer of Which of the following businesses is most...

Question 20

In a perpetual inventory system, the entry to record the cost of goods sold always includes an entry of equal amount to the:

Accepted Answer

In a perpetual inventory system, the cost of goods sold is updated each time a sale is made, reducing the inventory balance. Therefore, the entry to record the cost of goods sold should always include a corresponding entry to increase the cost of goods sold and decrease the inventory account by an equal amount. Option B is incorrect because the entry to record the sale would have been made at the time of the sale and not at the time of recording the cost of goods sold. Option C is incorrect because the purchases account is updated when goods are received, not when they are sold. Option D is incorrect because an entry is made to either increase or decrease an account.

Quiz 6: Merchandising Activities

The amount of costs transferred from the Inventory account to the Cost of Goods Sold account during January was:

The amount of costs transferred from the Inventory account to the Cost of Goods Sold account during January was:

Marietta Corporation uses a perpetual inventory system. All of its sales are made on account. The company sells merchandise costing $3,000 at a sales price of $4,300. In recording this transaction, Marietta will make all of the following entries except:

Prepare journals entries for the following, assuming the company uses a perpetual inventory method and records purchases at their net amounts.

If management wants to know the cost and quantity of merchandise on hand at all times, the business will probably:

The balance in the Inventory account at January 31 was:

The balance in the Inventory account at January 31 was:

The total debited to the Inventory account during January was:

The total debited to the Inventory account during January was:

Which of the following statements about merchandising activities is true? (More than one answer may be correct)

Mark and Amanda Carter own an appliance store and a restaurant. The appliance store sells merchandise on a 12-month installment plan; the restaurant sells only for cash. (More than one of the following answers may be correct.)

A periodic inventory system eliminates the need for:

Which of the following businesses is most likely to use a periodic inventory system?

In a perpetual inventory system, the entry to record the cost of goods sold always includes an entry of equal amount to the: