ACCT 1A – Ch 6

Merchandise inventory is classified on the balance sheet as a a. current liability b. long-term asset c. long-term liability d. current asset

Calculate income from operations for Jonas Company based on the following data: Sales $764,000 Operating expenses 52,500 Cost of merchandise sold 538,000 a. $485,500 b. $711,500 c. $173,500 d. $226,000

Calculate the gross profit for Jefferson Company based on the following: Sales $764,000 Selling expenses 42,500 Cost of merchandise sold 538,000 a. $183,500 b. $721,500 c. $226,000 d. $495,500

The primary difference between a periodic and perpetual inventory system is that a a. periodic system keeps a record showing the inventory on hand at all times b. periodic system provides an easy means to determine inventory shrinkage c. periodic system determines the inventory on hand only at the end of the accounting period d. periodic system records the cost of the sale on the date the sale is made

Which of the following accounts has a normal debit balance? a. Accounts Payable b. Sales c. Interest Revenue d. Merchandise Inventory

The arrangements between buyer and seller as to when payments for merchandise are to be made are called a. credit terms b. gross cash c. cash on demand d. net cash

Merchandise subject to terms 2/10, n/30, FOB shipping point, is sold on account to a customer for $25,000. What is the amount of the sales discount allowable? a. $500 b. $460 c. $150 d. $260

Which of the following accounts has a normal credit balance? a. Accounts Receivable b. Merchandise Inventory c. Sales d. Delivery Expense

When purchases of merchandise are made on account with a perpetual inventory system, the transaction is recorded with which entry? a. debit Merchandise Inventory; credit Accounts Payable b. debit Accounts Payable; credit Merchandise Inventory c. debit Merchandise Inventory; credit Purchases d. debit Merchandise Inventory; credit Cash Discounts

A sales invoice included the following information: merchandise price, $12,000; terms 1/10, n/eom, FOB shipping point with prepaid freight of $900 added to the invoice. Assuming that a credit for merchandise returned of $500 is granted prior to payment and the invoice is paid within the discount period, what is the amount of cash that should be received by the seller? a. $12,285 b. $11,500 c. $11,385 d. $10,480