Chapter 5 (ACC 121)

Which account does a merchandiser use that a service company does not use?

• Depreciation Expense

• Supplies Inventory

• Costs of Goods Sold

• Unearned Revenue

A perpetual inventory system

• does not maintain control over inventory as strongly as a periodic inventory system does

• keeps inventory continuously updated

• updates inventory at the end of the month, based on a physical count

• is used by both merchandising companies and service companies.

In a perpetual inventory system, what is the journal entry for the purchase of merchandise on account?

• Purchases

  Acc. Pay.

• Merch. Inv.

  Acc. Pay.

• Merch. Inv.

  Acc. Rec.

• Acc. Rec.

  Merch. Inv.

TX Manufacturing purchased inventory for $2,500 and paid a $200 freight bill. TX Manufacturing returned $350 of the goods to the seller and then took a 2% purchase discount. What is TX Manufacturing’s final cost of the inventory that it kept?

• 2,307

• 2,303

• 2,300

• 2,107

Marathon Sports Gear had net sales of $562,000 and Cost of Goods Sold of $290,000. How much gross profit did Marathon Sports Gear report?

• 562,000

• 852,000

• 272,000

• 290,000

Suppose the Jim’s Jeans Merchandise Inventory account shows an unadjusted balance of $10,000. On December 31, 2018, the physical count of goods on hand totaled $9,200. To adjust the accounts, Jim’s Jeans would make which of the following entries?

• Merch. Inv. 800

  COGS 800

• COGS 800

  Merch. Inv. 800

• Merch. Inv. 800

  Purchases 800

• Purchases 800

  Merch. Inv. 800

FOB shipping point refers to the situation in which title to goods in transit rests with the

• seller

• buyer

• shipping company

• transportation company

Using the perpetual inventory system, which account is used to record the payment of freight for inventory purchased?

• COGS

• Sales Revenue

• Delivery Expense

• Merchandise Inventory

Assume Easy Electronics had Net Sales Revenue of $100,000, and Cost of Goods Sold of $75,000. Average Merchandise Inventory was $15,000. What is the gross profit percentage for Easy Electronics for this period?

• 90%

• 75%

• 40%

• 25%

Discount Dollar uses a perpetual inventory system. Suppose Discount Dollar’s Purchases totaled $68,000, Purchase Returns totaled $5,200, Purchase Allowances totaled $1,500, Purchase Discounts totaled $2,800, and Freight In totaled $5,000. What is Discount Dollar’s net cost of inventory purchases?

• 63,500

• 58,500

• 55,000

• 53,500