Chapter 4 Accounting

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McGraw-Hill Ch 4

A merchandising company:

Earns net income by buying and selling merchandise.

A company had cash sales of $49,527, credit sales of $38,540, sales returns and allowances of $7,100, and sales discounts of $4,375. The company's net sales for this period equal:

$76,592
$49,527 + $38,540 - $7,100 - $4,375 = $76,592

Sales less sales discounts less sales returns and allowances equals:

Net sales.

Beginning inventory plus net cost of purchases is:

Merchandise available for sale.

A company has sales of $1,500,000, sales discounts of $102,000, sales returns and allowances of $123,000, shipping charges of $15,000, sales commissions of $34,000, net income of $263,500, and cost of goods sold of $420,000. What is the gross profit/margin for the period?

$855,000
$1,500,000 - $102,000 - $123,000 = $1,275,000 - $420,000 = $855,000

When preparing an unadjusted trial balance using a periodic inventory system, the amount shown for merchandise inventory is:

The beginning inventory amount.

A debit memorandum is:

The document a buyer issues to inform the seller of a debit made to the seller's account in the buyer's records.

On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the periodic inventory system. Alberts pays the invoice on October 8 and takes the appropriate discount. The journal entry that Robertson makes on October 8 is:

Cash 5,684
Sales Discount 116
Accounts Recievable 5,800
$5,800 x .02 = $116 sales discounts

The credit terms 2/10, n/30 are interpreted as:

2% cash discount if the amount is paid within 10 days, with the balance due in 30 days.

Alpha Company had cash sales of $94,275, credit sales of $83,450, sales returns and allowances of $1,700, and sales discounts of $3,475. Alpha's net sales for this period equal:

$172,550
$94,275 + $83,450 - $1,700 - $3,475 = $172,550

An account used in the periodic inventory system that is not used in the perpetual inventory system is:

Purchases.

Sales returns:

Refer to merchandise that customers return to the seller after the sale.

Merchandise inventory:

is a current asset

A company has net sales of $1,500,000, sales commissions in the amount of $194,000, net income of $366,400, and the gross profit ratio of 60%. What amount is listed as gross profit on the income statement for the period?

$900,000
$1,500,000 * .60 = $900,000

Multiple-step income statements:

Contain more detail than a simple listing of revenues and expenses.

On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the perpetual inventory system. The journal entry or entries that Robertson will make on October 1 is:

Accts Recievable 5,800
Sales 5,800
Cost of GS 4,000
Merchandise Inv 4,000

A company that uses the perpetual inventory system purchased merchandise inventory at a cost of $4,300 with credit terms 3/15, net 45. If the company elects to pay within the discount period, what would be the appropriate journal entry to record the payment?

Accts Payable 4,300
Merchandise Inv 129
Cash 4,171
$4,300 x .03 = $129 discount to reduce inventory account

A company had sales of $695,000 and cost of goods sold of $278,000. Its gross profit equals:

$417,000
$695,000 - $278,000 = $417,000

On July 22, a company that uses the perpetual inventory system purchased merchandise inventory at a cost of $5,250 with credit terms 2/10, net 30. If the company pays for the purchase on August 1, what would be the appropriate journal entry?

Accts Payable 5,250
Merchandise Inventory 105
Cash 5,145
$5,250 x .02 = $105 discount to reduce inventory account

Expenses that support the overall operations of a business and include the expenses relating to accounting, human resource management, and financial management are called:

General and administrative expenses

Herald Company had sales of $135,000, sales discounts of $2,000 and sales returns of $3,200. Herald Company's net sales equals:

$129,800
135,000 - 2,000 - 3,200 = 129,800.

On July 22, a company purchased merchandise inventory at a cost of $5,250 with credit terms 2/10, net 30. If the company pays for the purchase on August 7, what would be the appropriate journal entry?

Accts Payable 5250
Cash 5250

A company has sales of $1,500,000, sales discounts of $102,000, sales returns and allowances of $123,000, shipping charges of $15,000, sales commissions of $34,000, net income totaled $263,500, and cost of goods sold of $420,000. What is the net sales amount for the period?

$1,275,000
$1,500,000 - $102,000 - $123,000 = $1,275,000

Which of the following accounts would be closed with a debit?

Sales

Cost of goods sold:

Is the cost of merchandise sold to customers.

A company had sales of $375,000 and gross profit of $157,500. Its cost of goods sold was:

$217,500
$375,000 - $157,500 = $217,500

A trade discount is:

A reduction in price below the list price.

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