(1) A sale invoice included the following information: merchandise price, $10,000; freight, $900;

terms 1/10, n/eom, FOB shipping point. Assuming that a credit for merchandise returned of
$500 is granted to prior to payment and that the invoice is paid within the discount period, what
is the amount of cash that should be received by the seller?
(2)
(3) a. $10,305
(4) b. $9,500
(5) c. $9,306
(6) d. $9,900
(7) A. $10,305
(8)
(9)
(10)Which of the following accounts usually has a debit balance?
(11)
(12)a. Purchase Discounts
(13)b. Sales Tax Payable
(14)c. Allowance for Doubtful Accounts
(15)d. Freight-In
(16)D. Freight-In
(17)
(18)
(19)We have an expert-written solution to this problem!
(20)Merchandise is sold for cash. The selling price of the merchandise is $5,000 and the sale is
subject to a 7% state sales tax. The journal entry to record the sale would include
(21)
(22)a. A credit to Cash for $5,000
(23)b. A credit Sales for $5,350
(24)c. A credit to Sales Tax Payable for $350
(25)d. None
(26)C. A credit to Sales Tax Payable for $350
(27)
(28)
(29)If the buyer is to pay the freight costs of delivering merchandise, delivery terms
(30)
(31)a. FOB shipping point
(32)b. FOB destination
(33)c. FOB n/30
(34)d. FOB buyer
(35)A. FOB shipping point
(36)
(37)
(38)We have an expert-written solution to this problem!
(39)If the seller is to pay the freight costs of delivering merchandising, the delivery terms are
(40)
(41)a. FOB shipping point
(42)b. FOB destination
(43)c. FOB n/30
(44)d. FOB seller
(45)B. FOB destination
(46)
(47)
(48)If title to merchandise purchases passes to the buyer when the goods are shipped from the
seller, the terms are
(49)
(50)a. n/30
(51)b. FOB shipping point
(52)c. FOB destination
(53)d. consigned
(54)B. FOB shipping point
(55)
(56)
(57)Merchandise with an invoice price of $3000 is purchased on September 2 subject to terms of
2/10, n/30, FOB destination. Freight costs paid by the seller totaled $200. What is the cost of the
merchandise if paid on September 12, assuming the discount is taken?
(58)
(59)a. $3,140
(60)b. $3,136
(61)c. $2,744
(62)d. $2,940
(63)D. $2,940
(64)
(65)
(66)When goods are shipped FOB destination and the seller pays the freight charges, the buyer
(67)
(68)a. journalizes a reduction for the cost of the merchandise
(69)b. journalizes a reimbursement to the seller
(70)c. does not take a discount
(71)d. makes no journal entry for the freight
(72)D. makes no journal entry for the freight
(73)
(74)
(75)Anthony Company sold Madison Company merchandise on account FOB shipping point, 2/10,
net 39 for $10,000. Anthony prepaid the $300 shipping charge. Which of the following entries
does Anthony make to record this sale?
(76)
(77)a. Accounts Receivable-Madison, debit $10,000; Sales, credit $10,000
(78)b. Accounts Receivable-Madison, debit $10,000; Sales, credit $10,000 and Accounts Receivable-
Madison, debit $300; Cash, credit $300
(79)c. Accounts Receivable-Madison, debit $10,300; Sales, credit $10,300
(80)d. Accounts Receivable-Madison, debit $10,000; Sales, credit $10,000 and Freight Out, debit
$300; Cash credit $300
(81)B. Accounts Receivable-Madison, debit $10,000; Sales, credit $10,000 and Accounts Receivable-
Madison, debit $300; Cash, credit $300
(82)
(83)
(84)Emma Co. sold Isabelle Co. merchandise on account FOB shipping point, 2/10, net 30, for
$15,000. Emma Co. prepaid the $750 shipping charge. Using the perpetual inventory method,
which of the following entries will Isabella Co. make to record payment of the merchandise if
Isabella Co. pays within the discount period?
(85)
(86)a. Accounts Payable-Emma Co., debit $15,000; Freight In, credit $750; Cash, credit $14,250
(87)b. Accounts Payable-Emma Co., debit $15,750; Merchandise Inventory, credit $300; Cash, credit
$15,450
(88)c. Accounts Payable-Emma Co., debit $15,000; Freight In, debit $750; Cash, credit $15,750
(89)d. Accounts Payable-Emma Co., debit $15,750; Merchandise Inventory, debit $300; Cash, credit
$16,050
(90)B. Accounts Payable-Emma Co., debit $15,750; Merchandise Inventory, credit $300; Cash, credit
$15,450
(91)
(92)
(93)A chart of accounts for a merchandising business
(94)
(95)a. usually is the same as the chart of accounts for a service business
(96)b. usually requires more accounts than does the chart of accounts for a service business
(97)c. usually is standardized by the FASB for all merchandising business
(98)d. always uses a three-digit numbering system
(99)B. usually requires more accounts than does the chart of accounts for a service business
(100)
(101)
(102) Cumberland Co. sells $2000 of inventory to Hancock Co. for cash. Cumberland paid
$1250 for merchandise. Under a perpetual inventory system, which of the following journal
entries would be recorded?
(103)
(104) a. Cash $2000 Dr; Merchandise Inventory $1250
(105) b. Cash $2000 Dr; Sales $2000 Cr, and cost of merchandise sold $1250 Dr, merchandise
inventory $1250 Cr
(106) c. Cash $1250 Dr, Sales $125o Cr
(107) d. Accounts receivable $2000 Dr, Sales $2000 Cr and Cost of Merchandise Sold $1250 Dr,
Merchandise Inventory $1250 Cr
(108) B. Cash $2000 Dr; Sales $2000 Cr, and cost of merchandise sold $1250 Dr, merchandise
inventory $1250 Cr
(109)
(110)
(111) Isaac Co. sells merchandise on credit to sonar Co in the amount of $5700. The involve is
dated on April 1 with the terms of 1/15, net 45. What is the amount of the discount and up to
what date must the invoice be paid in order for the buyer to take advantage of the discount?
(112)
(113) a. $114, April 15
(114) b. $114, April 16
(115) c. $57, April 15
(116) d. $57, April 16
(117) C. $57, April 16
(118)
(119)
(120) Isaac Co. sells merchandise on credit to Sonar Co in the amount of $9600. The invoice is
dated on April 15 with the terms of 1/15, net 45. Is Sonar Co chooses not to take the discount,
by when should the payment be made?
(121)
(122) a. April 30
(123) b. May 30
(124) c. May 15
(125) d. April 25
(126) B. May 30
(127)
(128)
(129) Discounts taken by a buyer because of early payment are recorded on the seller's
accounting records as
(130)
(131) a. Purchases Discount
(132) b. Sales discount
(133) c. Trade discount
(134) d. Early payment discount
(135) B. Sales discount
(136)
(137)
(138) Taking advantage of a 2/10, n/30 purchases discount is equal to a savings yearly rate of
of approximately
(139)
(140) a. 2%
(141) b. 24%
(142) c. 20%
(143) d. 36%
(144) D. 36%
(145)
(146)
(147) Who pays the freight costs when the terms are FOB shipping point?
(148)
(149) a. the ultimate customer
(150) b. the buyer
(151) c. the seller
(152) d. either the seller or the buyer
(153) B. the buyer
(154)
(155)
(156) We have an expert-written solution to this problem!
(157) Who pays the freight cost when the terms are FOB destination?
(158)
(159) a. the seller
(160) b. the buyer
(161) c. the customer
(162) d. either the buyer or the seller
(163) A. the seller
(164)
(165)
(166) A retailer purchases merchandise with a catalog list price of $30,000. The retailer
receives a 15% trade discount and credit terms of 2/10, n/30. How much cash will be needed to
pay this invoice within the discount period?
(167)
(168) a. $30,000
(169) b. $24,900
(170) c. 29,400
(171) d. $24,990
(172) D. $24,990
(173)
(174)
(175) We have an expert-written solution to this problem!
(176) What type of company would normally offer trade discounts to its customers?
(177)
(178) a. Service companies
(179) b. Retailers
(180) c. Wholesalers
(181) d. On-line retailers
(182) C. Wholesalers
(183)
(184)
(185) We have an expert-written solution to this problem!
(186) Which of the following accounts will only be found in the chart of accounts of a
merchandise company?
(187)
(188) a. Sales
(189) b. Accounts Receivable
(190) c. Merchandise Inventory
(191) d. Accounts Payable
(192) C. Merchandise Inventory
(193)
(194)
(195) Which of the following items would affect the cost of merchandise inventory acquired
during the period?
(196)
(197) a. quantity discounts
(198) b. cash discounts
(199) c. freight-in
(200) d. all of these
(201) D. All of these
(202)
(203)
(204) If title to merchandise purchases passes to the buyer when the goods are delivered to
the buyer, the terms are
(205)
(206) a. cosigned
(207) b. n/30
(208) c. FOB shipping point
(209) d. FOB destination
(210) D. FOB destination
(211)
(212)
(213) If title to merchandise purchases passes to the buyer when the goods are shipped from
the seller, the terms are
(214)
(215) a. n/30
(216) b. FOB shipping point
(217) c. FOB destination
(218) d. cosigned
(219) B. FOB shipping point
(220)
(221)
(222) If the merchandise costs $3500, insurance in transit costs $250, tariff costs $75,
processing the purchase order by the purchasing department costs $50, and the company
receiving dock personnel cost $25, what is the total cost charged to the merchandise?
(223)
(224) a. $3,825
(225) b. $3,850
(226) c. $3,875
(227) d. $3,500
(228) A. $3,825
(229)
(230)
(231) Under the perpetual inventory system, all purchases of merchandise are debited to the
account entitled
(232)
(233) a. Merchandise Inventory
(234) b. Cost of Merchandise Sold
(235) c. Cost of Merchandise Available to for Sale
(236) d. Purchases
(237) A. Merchandise Inventory
(238)
(239)
(240) We have an expert-written solution to this problem!
(241) When the perpetual inventory system is used, the inventory sold is debited to
(242)
(243) a. supplies expense
(244) b. cost of merchandise sold
(245) c. merchandise inventory
(246) d. sales
(247) B. cost of merchandise sold
(248)
(249)
(250) We have an expert-written solution to this problem!
(251) Under a perpetual inventory system
(252)
(253) a. accounting records continuously disclose the amount of inventory
(254) b. increases in inventory resulting from purchases are debited to purchases
(255) c. there is no need for a year-end physical count
(256) d. the purchase returns and allowances account is credited when goods are returned to
vendors
(257) A. accounting records continuously disclose the amount of inventory
(258)
(259)
(260) We have an expert-written solution to this problem!
(261) The proper journal entry to record the receipt of inventory purchased on account in a
perpetual inventory system would be:
(262)
(263) a. Jan 1 Merchandise Inventory 1500/Accounts Payable 1500
(264) b. Jan 1 Office Supplies 1500/Accounts Payable 1500
(265) c. Jan 1 Purchases 1500/Accounts Payable 1500
(266) d. Jan 1 Purchases 1500/Accounts Receivable 1500
(267) A. Jan 1 Merchandise Inventory 1500/Accounts Payable 1500
(268)
(269)
(270) The Corbit Corp sold merchandise for $10,000 for cash. The cost of the merchandise sold
was $7,590. The journal entry(s) to record this transaction would be
(271)
(272) a. Cash 10,000/Merch Inv 10,000
(273) COMS 7,590/Sales 7,590
(274) b. Cash 10,000/Sales 10,000
(275) COMS 7,590/Merch Inv 7,590
(276) c. Cash 10,000/Sales 10,000
(277) COMS 10,000/Merch Inv 10,000
(278) d. Cash 7,590/Sales 7,590
(279) COMS 7,590/Merch Inv 7,590
(280) B. Cash 10,000/Sales 10,000
(281) COMS 7,590/Merch Inv 7,590
(282)
(283)
(284) Abbey Co. sold merchandise to Gomez Co. on account, $35,000, terms 2/15, net 45. The
cost of merchandise sold is $24,500. Abbey Co. issued a credit memo for $3,600 for merchandise
returned that originally cost $1,700. Gomez Co. paid the invoice within the discount period.
What is the amount of gross profit earned by Abbey Co. on the above transactions?
(285)
(286) a. 10,500
(287) b. 30, 772
(288) c. 7,972
(289) d. 31,400
(290) C. 7,972
(291)
(292)
(293) What are the journal entries for the following merchandise purchases?
(294)
(295) Purchase
(296) Purchase Discounts
(297) Purchases Returns & Allowances
(298) Merchandise Inventory
(299) -->Cash/Accts Payable
(300)
(301) Accts Payable
(302) -->Cash
(303) -->Merch Inv
(304)
(305) Accts Payable
(306) -->Merch Inv
(307)
(308)
(309) What are the journal entries for the following sales transactions?
(310)
(311) Sale
(312) Sale Discounts
(313) Cash/Accts Rec
(314) -->Sales
(315) Cost of Merch Sold
(316) -->Merch Inv
(317)
(318) Cash
(319) Sales Discounts
(320) -->Accts Rec
(321)
(322)
(323) What are the journal entries for sales returns ad allowances?
(324) Sales Returns and Allowances
(325) -->Accounts Receivable
(326) Merchandise Inventory
(327) -->CoMS
(328)
(329)
(330) Gross Profit =
(331) Sales - CoMS
(332)
(333)
(334) Net Income =
(335) Gross Profit - Operating Exp
(336)
(337)
(338) What is the journal entry for FOB shipping point? (buyer pays)
(339) Merch Inv
(340) -->Cash
(341)
(342)
(343) What is the journal entry for FOB destination point? (buyer pays)
(344) Delivery Exp
(345) -->Cash
(346)