135)
Prentice 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. Prentice’s net sales for this period equal:
A) $176,025. B) $172,550. C) $94,275. D) $177,725. E) $174,250.
136)
Multiple-step income statements:
A)
Are only used in perpetual inventory systems.
B)
Are required by the FASB and IASB.
C)
Are required for the periodic inventory system.
D)
Contain more detail than a simple listing of revenues and expenses.
E)
List cost of goods sold as an operating expense.
137)
Expenses to promote sales by displaying and advertising merchandise, make sales, and deliver
goods to customers are known as:
A)
Cost of goods sold.
B)
Selling expenses.
C)
Non-operating activities.
D)
Purchasing expenses.
E)
General and administrative expenses.
138)
A company has net sales of $752,000 and cost of goods sold of $543,000. Its net income is
$17,530. The company’s gross margin and operating expenses, respectively, are:
A) $227,000 and $525,470
B) $209,000 and $191,470
C) $191,470 and $209,000
D) $525,470 and $227,000
E) $734,000 and $191,470
139)
Which of the following accounts is used in the periodic inventory system but not used in the
perpetual inventory system?
A)
Sales
B)
Merchandise Inventory
C)
Purchases
D)
Accounts Payable
E)
Sales Returns and Allowances
140)
When preparing an unadjusted trial balance using a periodic inventory system, the amount shown
for Merchandise Inventory is:
A)
The beginning inventory amount.
B)
Equal to the cost of goods sold.
C)
Equal to the gross profit.
D)
Equal to the cost of goods purchased.
E)
The ending inventory amount.
141)
On September 12, Vander Company sold merchandise in the amount of $5,800 to Jepson
Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Vander uses the
periodic inventory system and the gross method of accounting for sales. The journal entry or entries
that Vander will make on September 12 is:
A)
Sales
5,800
Accounts receivable
5,800
Cost of goods sold
4,000
Merchandise Inventory
4,000
B)
Sales
5,800
Accounts receivable
5,800
C)
Accounts receivable
5,800
Sales
5,800
D)
Accounts receivable
4,000
Sales
4,000
E)
Accounts receivable
5,800
Sales
5,800
Cost of goods sold
4,000
Merchandise Inventory
4,000
142)
On September 12, Vander Company sold merchandise in the amount of $5,800 to Jepson
Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Jepson uses the
periodic inventory system and the gross method of accounting for purchases. The journal entry that
Jepson will make on September 12 is:
A)
Purchases
5,800
Accounts payable
5,800
B)
Purchases
5,800
Accounts receivable
5,800
C)
Merchandise inventory
5,800
Accounts payable
5,800
D)
Accounts payable
4,000
Merchandise inventory
4,000
E)
Purchases
4,000
Accounts receivable
4,000
143)
On September 12, Vander Company sold merchandise in the amount of $5,800 to Jepson Company,
with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Vander uses the periodic
inventory system and the gross method of accounting for sales. Jepson pays the invoice on
September 18, and takes the appropriate discount. The journal entry that Vander makes on
September 18 is:
A)
Cash
5,800
Accounts receivable
5,800
B)
Cash
5,684
Accounts receivable
5,684
C)
Cash
3,920
Sales discounts
80
Accounts receivable
4,000
D)
Cash
4,000
Accounts receivable
4,000
E)
Cash
5,684
Sales discounts
116
Accounts receivable
5,800
144)
On September 12, Vander Company sold merchandise in the amount of $5,800 to Jepson
Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Jepson uses the
periodic inventory system and the gross method of accounting for purchases. Jepson pays the
invoice on September 18, and takes the appropriate discount. The journal entry that Jepson makes
on September 18 is:
A)
Accounts payable
5,800
Purchases discounts
116
Cash
5,684
B)
Cash
5,684
Accounts receivable
5,684
C)
Cash
5,684
Purchases discounts
116
Accounts payable
5,800
D)
Accounts payable
5,800
Merchandise inventory
116
Cash
5,684
E)
Purchases
5,684
Cash
5,684
145)
On September 12, Vander Company sold merchandise in the amount of $5,800 to Jepson
Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Vander uses the
periodic inventory system and the gross method of accounting for sales. On September 14, Jepson
returns some of the non-defective merchandise, which is restored to inventory. The selling price of
the returned merchandise is $500 and the cost of the merchandise returned is $350. The entry or
entries that Vander must make on September 14 is:
A)
Sales returns and allowances
350
Accounts receivable
350
B)
Accounts receivable
500
Sales returns and allowances
500
C)
Sales returns and allowances
500
Accounts receivable
500
Merchandise inventory
350
Cost of goods sold
350
D)
Sales returns and allowances
500
Accounts receivable
500
E)
Accounts receivable
500
Sales returns and allowances
500
Cost of goods sold
350
Merchandise inventory
350
146)
On September 12, Vander Company sold merchandise in the amount of $5,800 to Jepson
Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Vander uses the
periodic inventory system and the gross method of accounting for sales. On September 14, Jepson
returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the
merchandise returned is $350. Jepson pays the invoice on September 18, and takes the appropriate
discount. The journal entry that Vander makes on September 18 is:
A)
Cash
5,194
Sales discounts
106
Accounts receivable
5,300
B)
Cash
5,684
Sales discounts
116
Accounts receivable
5,800
C)
Cash
5,684
Accounts receivable
5,684
D)
Cash
4,000
Accounts receivable
4,000
E)
Cash
5,800
Accounts receivable
5,800
147)
Cushman Company had $800,000 in net sales, $350,000 in gross profit, and $200,000 in operating
expenses. Cost of goods sold equals:
A) $150,000. B) $450,000. C) $200,000. D) $350,000. E) $800,000.
148)
Cushman Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances
of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. Gross profit
equals:
A) $770,000. B) $408,000. C) $115,000. D) $402,000. E) $390,000.
149)
Cushman Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances
of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. Net income
equals:
A) $402,000. B) $390,000. C) $408,000. D) $115,000. E) $770,000.
150)
A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it
returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise
taking any discount it was entitled to. The cash paid on June 24 equals:
A) $9,700. B) $9,800. C) $10,000. D) $8,724. E) $8,924.
151)
A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45, and FOB
shipping point. The freight charge, $500, was added to the invoice amount. On June 20, it returned
$800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any
discount it is entitled to. The cash paid on June 24 equals:
A) $10,300. B) $9,224. C) $9,424. D) $10,200. E) $10,500.
152)
A company’s current assets are $23,420, its quick assets are $13,890 and its current liabilities are
$12,220. Its acid-test ratio equals:
A) 1.14. B) 1.41. C) .52. D) 0.88. E) 1.91.
153)
Using the following year-end information for Bauman, LLC, calculate the current ratio and acid-test
ratio:
Cash
$ 48,000
Short-term investments
12,000
Accounts receivable
45,000
Inventory
225,000
Prepaid expenses
12,500
Accounts payable
86,500
Other current payables
22,000
A) 3.01 and 1.21
B) 3.16 and 1.21
C) 3.04 and 1.21
D) 3.16 and .97
E) 1.09 and 4.77
154)
A company’s net sales are $775,420, its costs of goods sold are $413,890, and its net income is
$117,220. Its gross margin ratio equals:
A) 40.5%. B) 46.6%. C) 31.5%. D) 53.4%. E) 28.3%.
155)
All of the following statements related to U.S. GAAP and IFRS are true except:
A)
Neither system defines operating income.
B)
U.S. GAAP offers little guidance about the presentation order of expenses.
C)
Accounting for basic inventory transactions is the same under the two systems.
D)
Neither system requires separate disclosure of items when their size, nature, or frequency are
important.
E)
The closing process for merchandisers is the same under both systems.
156)
A company purchases merchandise with a catalog price of $20,000. The company receives a 35%
trade discount from the seller. The seller also offers credit terms of 2/10, n/30. Assuming no
returns were made and that payment was made within the discount period, what is the net cost of
the merchandise?
A) $19,600. B) $13,000. C) $13,720. D) $6,860. E) $12,740.
157)
A company has net sales of $825,000 and cost of goods sold of $547,000. Its net income is
$98,500. The company’s gross margin and operating expenses, respectively, are:
A) $179,500 and $98,500
B) $645,500 and $179,500
C) $209,000 and $191,470
D) $278,000 and $98,500
E) $278,000 and $179,500
158)
On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company,
with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual
inventory system and the gross method of accounting for sales. The journal entry or entries that
Klein will make on March 12 is:
A)
Accounts receivable
7,800
Sales
7,800
Cost of goods sold
4,500
Merchandise Inventory
4,500
B)
Sales
7,800
Accounts receivable
7,800
Cost of goods sold
4,500
Merchandise Inventory
4,500
C)
Accounts receivable
4,500
Sales
4,500
D)
Accounts receivable
7,800
Sales
7,800
E)
Sales
7,800
Accounts receivable
7,800
159)
On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company,
with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual
inventory system and the gross method of accounting for sales. Babson pays the invoice on March
17, and takes the appropriate discount. The journal entry that Klein makes on March 17 is:
A)
Cash
7,644
Sales discounts
156
Accounts receivable
7,800
B)
Cash
4,410
Sales discounts
90
Accounts receivable
4,500
C)
Cash
4,500
Accounts receivable
4,500
D)
Cash
7,644
Accounts receivable
7,644
E)
Cash
7,800
Accounts receivable
7,800
160)
On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company,
with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual
inventory system and the gross method of accounting for sales. On March 15, Babson returns some
of the merchandise, which is not defective. The selling price of the returned merchandise is $600
and the cost of the merchandise returned is $350. The entry or entries that Klein must make on
March 15 is:
A)
Sales returns and allowances
350
Accounts receivable
350
B)
Accounts receivable
600
Sales returns and allowances
600
Cost of goods sold
350
Merchandise inventory
350
C)
Sales returns and allowances
600
Accounts receivable
600
D)
Accounts receivable
600
Sales returns and allowances
600
E)
Sales returns and allowances
600
Accounts receivable
600
Merchandise inventory
350
Cost of goods sold
350