ACCOUNTING FOR BASIC MERCHANDISING TRANSACTIONS

The primary difference between a periodic and perpetual inventory system is that a

• periodic system keeps a record showing the inventory on hand at all times

• periodic system determines the inventory on hand only at the end of the accounting

  period

• periodic system provides an easy means to determine inventory shrinkage

• periodic system records the cost of the sale on the date the sale is made

Gross profit is equal to:

• sales plus sales returns and allowances less sales discounts less cost of merchandise sold

• sales plus (sales discounts and sales returns and allowances) plus cost of merchandise

  sold

• sales less (sales discounts and sales returns and allowances) less cost of merchandise sold

• sales plus sales discounts less sales returns and allowances less cost of merchandise sold

Using the following information, what is the amount of cost of merchandise sold?

• 31,220

• 25,870

• 23,270

• 25,780

Using the following information, what is the amount of gross profit?

• 31,970

• 30,470

• 25,780

• 56,250

Using the following information, what is the amount of net sales?

• 25,780

• 57,000

• 57,750

• 56,250

Using the following information, what is the amount of merchandise available for sale?

• 33,580

• 33,850

• 25,780

• 30,470

Silver Co. sold merchandise to Bronze Co. on account, $23,000, terms 2/15, net 45. The cost

of the merchandise sold is $18,500. Silver Co. issued a credit memorandum for $2,500 for

merchandise returned that originally cost $1,900. The Bronze Co. paid the invoice within the

discount period. What is amount of net sales from the above transactions?

• $20,090

• $20,040

• $20,500

• $23,900

Using a perpetual inventory system, the entry to record the sale of merchandise on account

includes a

• debit to Sales

• debit to Merchandise Inventory

• credit to Merchandise Inventory

• credit to Accounts Receivable

Using a perpetual inventory system, the entry to record the return from a customer of

merchandise sold on account includes a

• credit to Sales Returns and Allowances

• debit to Merchandise Inventory

• credit to Merchandise Inventory

• debit to Cost of Merchandise Sold

A retailer purchases merchandise with a catalog list price of $10,000. The retailer receives a

25% trade discount and credit terms of 2/10, n/30. What amount should the retailer debit to

the Merchandise Inventory account?

• $10,000

• $7,500

• $9,800

• $7,350