104)
The amount recorded for merchandise inventory includes all of the following except:
A)
Purchase discounts.
B)
Returns and allowances.
C)
Freight costs paid by the buyer.
D)
Trade discounts.
E)
Freight costs paid by the seller.
105)
A company uses the perpetual inventory system and recorded the following entry:
Accounts Payable
2,500
Merchandise Inventory
50
Cash
2,450
This entry reflects a:
A)
Return of merchandise.
B)
Payment of the account payable less a 1% cash discount taken.
C)
Payment of the account payable less a 2% cash discount taken.
D)
Sale of merchandise on credit.
E)
Purchase of merchandise on credit.
106)
A debit memorandum is:
A)
Required when a purchase discount is granted.
B)
Not necessary in a perpetual inventory system.
C)
Required whenever a journal entry is recorded.
D)
The source document for the purchase of merchandise inventory.
E)
The document a buyer issues to inform the seller of a debit made to the seller’s account
payable in the buyer’s records.
107)
A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it
returned $200 worth of merchandise. On July 8, it paid the full amount due. The amount of the
cash paid on July 8 equals:
A) $200. B) $1,800. C) $1,568. D) $1,564. E) $1,600.
108)
A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it
returned $200 worth of merchandise. On July 28, it paid the full amount due. The amount of the
cash paid on July 28 equals:
A) $1,600. B) $1,800. C) $1,568. D) $1,564. E) $200.
109)
A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it
returned $200 worth of merchandise. On July 28, it paid the full amount due. Assuming the
company uses a perpetual inventory system, and records purchases using the gross method, The
correct journal entry to record the purchase on July 5 is:
A)
Debit Accounts Payable $1,800; credit Merchandise Inventory $1,800.
B)
Debit Merchandise Inventory $1,600; credit Cash $1,600.
C)
Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory
$1,600.
D)
Debit Merchandise Inventory $1,800; credit Accounts Payable $1,800.
E)
Debit Merchandise Inventory $1,800; credit Sales Returns $200; credit Cash $1,600.
110)
A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it
returned $200 worth of merchandise. On July 28, it paid the full amount due. Assuming the
company uses a perpetual inventory system, and records purchases using the gross method, the
correct journal entry to record the merchandise return on July 7 is:
A)
Debit Merchandise Inventory $200; credit Accounts Payable $200.
B)
Debit Accounts Payable $200; credit Merchandise Inventory $200.
C)
Debit Merchandise Inventory $200; credit Sales Returns $200.
D)
Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory
$1,600.
E)
Debit Merchandise Inventory $1,600; credit Cash $1,600.
111)
A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it
returned $200 worth of merchandise. On July 28, it paid the full amount due. Assuming the
company uses a perpetual inventory system, and records purchases using the gross method, the
correct journal entry to record the payment on July 28 is:
A)
Debit Accounts Payable $1,800; credit Cash $1,800.
B)
Debit Cash $1,600; credit Accounts Payable $1,600.
C)
Debit Merchandise Inventory $1,600; credit Cash $1,600.
D)
Debit Accounts Payable $1,600; credit Cash $1,600.
E)
Debit Accounts Payable $1,600; credit Merchandise Inventory $32; credit Cash $1,568.
112)
A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it
returned $200 worth of merchandise. On July 12, it paid the full amount due. Assuming the
company uses a perpetual inventory system, and records purchases using the gross method, the
correct journal entry to record the payment on July 12 is:
A)
Debit Accounts Payable $1,800; credit Cash $1,800.
B)
Debit Accounts Payable $1,600; credit Cash $1,600.
C)
Debit Accounts Payable $1,600; credit Merchandise Inventory $32; credit Cash $1,568.
D)
Debit Cash $1,600; credit Accounts Payable $1,600.
E)
Debit Merchandise Inventory $1,600; credit Cash $1,600.
113)
A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350.
The company returned $275 worth of merchandise and then paid the invoice within the 2% cash
discount period. The total cost of this merchandise is:
A) $3,995.00. B) $4,075.00. C) $4,000.50. D) $3,725.00. E) $3,925.00.
114)
A buyer failed to take advantage of the vendor’s credit terms of 2/15, n/45, but instead paid the
invoice in full at the end of 45 days. By not taking advantage of the cash discount, the equivalent
annual interest lost on the amount of the purchase is:
A) 24.5% B) 16.2% C) 24.3% D) 18.9% E) 12.2%
115)
Sales returns:
A)
Refer to reductions in the selling price of merchandise sold to customers.
B)
Represent trade discounts.
C)
Are not recorded under the perpetual inventory system until the end of each accounting
period.
D)
Refer to merchandise that customers return to the seller after the sale.
E)
Represent cash discounts.
116)
All of the following statements regarding sales returns and allowances are true except:
A)
Sales returns and allowances are rarely disclosed in published financial statements.
B)
Sales returns and allowances are recorded in a separate contra-revenue account.
C)
There is no relationship between sales returns and allowances and the possibility of lost future
sales.
D)
Sales returns and allowances are closed to the Income Summary account.
E)
A reduction in the selling price because of damaged merchandise is included in sales returns
and allowances.
117)
A debit to Sales Returns and Allowances and a credit to Accounts Receivable:
A)
Reflects an increase in amount due from a customer.
B)
Is recorded when a customer takes a discount.
C)
Records the cost side of a sales return.
D)
Reflects a decrease in amount due to a supplier.
E)
Recognizes that a customer returned merchandise and/or received an allowance.
118)
Sales less sales discounts less sales returns and allowances equals:
A)
Net income.
B)
Cost of goods sold.
C)
Gross profit.
D)
Net sales.
E)
Net purchases.
119)
Garza Company had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200.
Garza Company’s net sales equals:
A) $140,200. B) $5,200. C) $129,800. D) $135,000. E) $133,000.
120)
On May 1, Shilling Company sold merchandise in the amount of $5,800 to Anders, with credit
terms of 2/10, n/30. The cost of the items sold is $4,000. Shilling uses the perpetual inventory
system and the gross method table. The journal entry or entries that Shilling will make on May 1 is:
A)
Accounts receivable
4,000
Sales
4,000
B)
Sales
Accounts receivable
5,800
C)
Accounts receivable
5,800
Sales
5,800
Cost of goods sold
4,000
Merchandise Inventory
4,000
D)
Sales
Accounts receivable
5,800
Cost of goods sold
Merchandise Inventory
4,000
E)
Accounts receivable
5,800
Sales
5,800
121)
On May 1, Anders Company purchased merchandise in the amount of $5,800 from Shilling, with
credit terms of 2/10, n/30. Anders uses the perpetual inventory system and the gross method table.
The journal entry or entries that Anders will make on May 1 is:
A)
Merchandise Inventory
5,800
Cash
5,800
B)
Merchandise Inventory
5,800
Accounts payable
5,800
C)
Purchases
5,800
Accounts payable
5,800
D)
Accounts payable
5,800
Sales
5,800
E)
Sales
5,800
Accounts receivable
5,800
122)
On February 3, Smart Company sold merchandise in the amount of $5,800 to Truman Company,
with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Smart uses the perpetual
inventory system and the gross method table. Truman pays the invoice on February 8, and takes the
appropriate discount. The journal entry that Smart makes on February 8 is:
A)
Cash
5,684
Sales discounts
116
Accounts receivable
5,800
B)
Cash
5,684
Accounts receivable
5,684
C)
Cash
5,800
Accounts receivable
5,800
D)
Cash
4,000
Accounts receivable
4,000
E)
Cash
3,920
Sales discounts
80
Accounts receivable
4,000
123)
On July 1, Ferguson Company sold merchandise in the amount of $5,800 to Tracey Company, with
credit terms of 2/10, n/30. The cost of the items sold is $4,000. Ferguson uses the perpetual
inventory system and the gross method table. On July 5, Tracey returns some of the merchandise.
The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. The
entry or entries that Ferguson must make on July 5 is:
A)
Sales returns and allowances
350
Accounts receivable
350
B)
Accounts receivable
500
Sales returns and allowances
500
C)
Accounts receivable
500
Sales returns and allowances
500
Cost of goods sold
350
Merchandise inventory
350
D)
Sales returns and allowances
500
Accounts receivable
500
Merchandise inventory
350
Cost of goods sold
350
E)
Sales returns and allowances
500
Accounts receivable
500
124)
Juniper Company uses a perpetual inventory system and the gross method of accounting for
purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On
August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due.
The amount of the cash paid on August 16 equals:
A) $8,152.50. B) $8,167.50. C) $9,750.00. D) $8,250.00. E) $9,652.50.
125)
Juniper Company uses a perpetual inventory system and the gross method of accounting for
purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On
August 11, it returned $1,500 worth of merchandise. On August 26, it paid the full mount due. The
amount of the cash paid on August 26 equals:
A) $9,652.50. B) $8,250.00. C) $9,750.00. D) $8,167.50. E) $8,152.50.
126)
Juniper Company uses a perpetual inventory system and the gross method of accounting for
purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On
August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due.
The correct journal entry to record the purchase on August 7 is:
A)
Debit Merchandise Inventory $9,750; credit Sales Returns $1,500; credit Cash $8,250.
B)
Debit Accounts Payable $8,250; debit Purchase Returns $1,500; credit Merchandise
Inventory $9,750.
C)
Debit Accounts Payable $9,750; credit Merchandise Inventory $9,750.
D)
Debit Merchandise Inventory $9,750; credit Cash $9,750.
E)
Debit Merchandise Inventory $9,750; credit Accounts Payable $9,750.
127)
Juniper Company uses a perpetual inventory system and the gross method of accounting for
purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On
August 11, it returned $1,500 worth of merchandise. On August 26, it paid the full amount due.
The correct journal entry to record the merchandise return on August 11 is:
A)
Debit Accounts Payable $1,500; credit Purchase Returns $1,500.
B)
Debit Accounts Payable $1,500; credit Cash $1,500.
C)
Debit Accounts Payable $1,500; credit Merchandise Inventory $1,500.
D)
Debit Merchandise Inventory $1,500; credit Cash $1,500.
E)
Debit Merchandise Inventory $1,500; credit Sales Returns $1,500.
128)
Juniper Company uses a perpetual inventory system and the gross method of accounting for
purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On
August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due.
The correct journal entry to record the payment on August 16 is:
A)
Debit Accounts Payable $8,250; credit Merchandise Inventory $82.50; credit Cash $8,167.50.
B)
Debit Cash $8,250; credit Accounts Payable $8,250.
C)
Debit Accounts Payable $9,750; credit Merchandise Inventory $97.50; credit Cash $9,652.50.
D)
Debit Accounts Payable $8,167.50; credit Cash $8,167.50.
E)
Debit Merchandise Inventory $8,250; credit Cash $8,250.
129)
A company records the following journal entry: debit Cash $1,470, debit Sales Discounts $30, and
credit Accounts Receivable $1,500. This means that a customer has taken what percentage cash
discount for early payment?
A) 5% B) 10% C) 2% D) 15% E) 1%
130)
All of the following statements regarding inventory shrinkage are true except:
A)
Inventory shrinkage refers to the loss of inventory.
B)
Inventory shrinkage can be caused by theft or deterioration.
C)
Inventory shrinkage is recognized by debiting an operating expense.
D)
Inventory shrinkage is determined by comparing a physical count of inventory with recorded
inventory amounts.
E)
Inventory shrinkage is recognized by debiting Cost of Goods Sold.
131)
Frisco Company’s Merchandise Inventory account at year-end has a balance of $62,115, but a
physical count reveals that only $61,900 of inventory exists. The adjusting entry to record this $215
of inventory shrinkage is:
A)
Cost of goods sold
215
Merchandise Inventory
215
B)
Merchandise Inventory
215
Inventory shrinkage expense
215
C)
Cost of goods sold
215
Purchases discounts
215
D)
Inventory shrinkage expense
215
Cost of goods sold
215
E)
Purchases discounts
215
Cost of goods sold
215
132)
Which of the following accounts would be closed at the end of the accounting period with a debit?
A)
Operating Expenses.
B)
Cost of Goods Sold.
C)
Sales Returns and Allowances.
D)
Sales.
E)
Sales Discounts.
133)
An income statement that includes cost of goods sold as another expense and shows only one
subtotal for total expenses is a:
A)
Combined income statement.
B)
Simplified income statement.
C)
Balanced income statement.
D)
Single-step income statement.
E)
Multiple-step income statement.
134)
Expenses that support the overall operations of a business and include the expenses relating to
accounting, human resource management, and financial management are called:
A)
Cost of goods sold.
B)
Non-operating activities.
C)
General and administrative expenses.
D)
Purchasing expenses.
E)
Selling expenses.