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ACCT ch 6

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The difference between a service company’s and a merchandising company’s income statements is that the merchandising company includes
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cost of merchandise sold
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Merchandise inventory is reported as a(n)
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current asset
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gross profit is
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profit before deducting operating expenses
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During the month, merchandise is sold for $23,500 cash and for $34,000 on account. The cost of merchandise sold is $41,500. What is the amount of gross profit?
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$16,000
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The Banks Company sold merchandise on account for $35,000 with terms 2/10, n/30. The cost of merchandise sold was $27,600. If the invoice is paid in the discount period, what is the amount of cash received by Banks Company?
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$34,300
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Garden Company sold merchandise to Mamouth Industries on account for $3,450 with terms 2/10, n/30. The cost of merchandise sold was $1,850. Garden Company refunded Mamouth Industries $900 for returned merchandise. The cost of merchandise sold was $600. Which of the following will be recorded by Mamouth Industries in the journal entry for the return using the perpetual inventory system?
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Credit to Merchandise Inventory, $882
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Global Company purchased merchandise on account from Planet Company for $56,000 with terms 1/15, net 45. Global Company returned $6,000 of the merchandise and received full credit from Planet Company. Which of the following will be included in the journal entry for the payment (assume that the amount due was paid within the discount period)?
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Credit to Cash, $49,500
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Credit terms are terms for
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when the payments for merchandise are to made
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Sales less cost of merchandise sold is
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gross profit
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In the multiple-step income statement, cost of merchandise sold is subtracted from
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sales
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Determine the income from operations using the following information: Sales $680,200 Cost of merchandise sold 504,000 Selling expenses 50,400 Administrative expenses 25,000
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$100,800
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Sales is equal to sales
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less (sales returns and allowances plus sales discounts).
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The fourth closing entry is to close the owner’s drawing account to
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the owner’s capital account.
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The second closing entry for a merchandising business will include which of the following?
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cost of merchandise sold
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The inventory records of Global Company indicate that $76,800 of merchandise should be on hand at the end of the month. The physical inventory indicates that $74,900 is actually on hand. The journal entry to adjust inventory shrinkage will include
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a debit to Cost of Merchandise Sold for $1,900
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After the second closing entry is posted, Income Summary is equal to
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net income or loss
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In the ratio of sales to assets, the assets consist of
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the average of total assets from previous and current balance sheets
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A change in the ratio of sales to assets from 2.0 to 1.8 would indicate
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an unfavorable trend in using assets to generate sales
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The numerator in the ratio of sales to assets is
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sales
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The denominator in the ratio of sales to assets is
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average total assets
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The difference between a service company’s and a merchandising company’s balance sheets is that the merchandising company includes
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.merchandise inventory
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Garden Company purchased merchandise on account from Parker Company for $88,000 with terms 1/15, net 45. Garden Company returned $12,000 of the merchandise and received full credit from Parker Company. If Garden Company pays within the discount period, what is the amount of cash required for payment?
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$75,240
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The Geo Company sold merchandise on account for $35,000 with terms 2/10, n/30. The cost of merchandise sold was $27,600. Which of the following journal entries will be recorded for the sale of merchandise?
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Debit to Accounts Receivable, $34,200; credit to Sales, $34,200
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Other income is
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added to income from operations
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The third closing entry
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is to transfer the net income or loss to the capital account.