19) For each of the following accounts, state type of account and the normal account balance. Assume a
periodic inventory system.
Account Title
Type of Account
Normal Account Balance
Purchase Returns and
Allowances
Merchandise Inventory
Purchases
Account Title
Type of Account
Normal Account Balance
Purchase Returns and
Allowances
contra expense
credit
Merchandise Inventory
current asset
debit
Purchases
expense
debit
20) For each of the following accounts, state type of account and the normal account balance. Assume a
periodic inventory system.
Account Title
Type of Account
Normal Account Balance
Freight In
Purchase Discounts
Merchandise Inventory
Freight In
adjunct expense
debit
Purchase Discounts
contra expense
credit
Merchandise Inventory
current asset
debit
21) Journalize the following purchase transactions for Main Street Office Supplies using the periodic
inventory system. Explanations are not required.
May 12
Main Street buys $167,500 worth of merchandise
inventory on account with credit terms of 2/10, n/30.
May 16
Main Street returns $18,600 of the merchandise to the
vendor due to damage during shipment.
May 21
Main Street pays the amount due.
May 12
Purchases
Accounts Payable
May 16
Accounts Payable
Purchase Returns and Allowances
May 21
Accounts Payable ($167,500 – $18,600)
Cash ($148,900 − $2,978)
Purchase Discounts ($148,900 × 0.02)
22) Journalize the following purchase transactions for Rocky’s Swimming Pool Supply Company using
the periodic inventory system. Explanations are not required.
May 2
Purchased $5,280 of merchandise inventory on account under
terms 3/10, n/30 and FOB shipping point.
May 6
Returned $675 of defective merchandise purchased on May 2.
May 8
Paid freight bill of $120 on May 2 purchase.
May 12
Paid amount owed on credit purchase on May 2.
May 2
Purchases
Accounts Payable
May 6
Accounts Payable
Purchase Returns and Allowances
May 8
Cash
May 12
Accounts Payable ($5,280 – $675)
Cash ($4,605 – $138.15)
Purchase Discounts ($4,605 × .03)
24) In a periodic inventory system, a sale of inventory involves two entries, one to record Sales Revenue
and one to record Cost of Goods Sold.
25) In a periodic inventory system, accounting for sales discounts is the same as in a perpetual inventory
system, except there is no entry for merchandise inventory.
26) When recording the sale of merchandise inventory, using a periodic inventory system, ________.
A) a running record of merchandise inventory is maintained during the accounting period
B) the Sales Revenue account is credited only as an adjusting entry because sales information is not
needed during the accounting period
C) sales discounts are not recorded
D) there is no need to record an entry to the Merchandise Inventory and the Cost of Goods Sold accounts
27) Smithville Furniture sold 15 desks, with a cost of $6,500, for $11,250 on account. Smithville uses the
periodic inventory system. Which of the following is the correct way to record this transaction?
A)
Accounts
Debit
Credit
Sales Revenue
11,250
Accounts Receivable
11,250
B)
Accounts
Debit
Credit
Accounts Receivable
11,250
Sales Revenue
11,250
Cost of Goods Sold
6,500
Merchandise Inventory
6,500
C)
Accounts
Debit
Credit
Accounts Receivable
11,250
Sales Revenue
11,250
D)
Accounts
Debit
Credit
Accounts Receivable
11,250
Sales Revenue
11,250
Purchases
6,500
Merchandise Inventory
6,500
28) Journalize the following sales transactions for Bryson Printing Equipment using the periodic
inventory system. Explanations are not required.
March 2: Bryson sold $45,800 of printing equipment on account, credit terms n/30.
March 5: Bryson received a $2,500 sales return of damaged goods from the customer.
March 11: Bryson received payment from the customer of the amount due.
29) Journalize the following sales transactions for Power Equipment using the periodic inventory system.
Explanations are not required.
July 1 Sold $4,200 of equipment on account, credit terms are n/30, FOB destination.
July 5: Paid $90 on freight out.
July 11: Received payment from the customer for the full amount due on the July 1 sale.
30) When preparing financial statements under the periodic inventory system, a calculation of cost of
goods sold must be made.
31) The financial statements under the periodic inventory system and the perpetual inventory system are
the same.
32) Cost of goods available for sale represents beginning merchandise inventory plus net purchases less
freight in.
33) Which of the following line items would appear on the income statement of a company that uses the
periodic inventory system, but not on that of a company that uses the perpetual inventory system?
A) Net Sales Revenue
B) Cost of Goods Sold
C) Cost of Goods Available for Sale
D) Operating Expenses
34) Calculate the cost of goods sold for a merchandiser using the periodic inventory system from the
following details.
Purchases
$540,000
Beginning Merchandise Inventory
185,000
Purchase Returns and Allowances
50,000
Purchase Discounts
14,000
Freight In
18,000
Ending Merchandise Inventory
150,000
A) $540,000
B) $529,000
C) $547,000
D) $829,000
35) The following details are provided by Western Wear Merchandisers. The company uses the periodic
inventory system.
Net Sales Revenue
$198,000
Purchases
94,000
Purchase Returns and Allowances
2,000
Purchase Discounts
1,500
Freight In
1,700
Beginning Merchandise Inventory
63,000
Ending Merchandise Inventory
37,000
Calculate the amount of net purchases.
A) $153,500
B) $88,800
C) $90,500
D) $104,000
36) From the following details of a merchandiser, calculate the cost of goods sold. (Assume the
merchandiser uses the periodic inventory system.)
Net Sales Revenue
$200,000
Purchases
90,000
Purchase Returns and Allowances
1,900
Purchase Discounts
1,300
Freight In
1,850
Beginning Merchandise Inventory
64,000
Ending Merchandise Inventory
37,000
A) $115,650
B) $59,800
C) $113,800
D) $51,650