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Exam 5: Accounting for Merchandising Operations Perpetual Approach

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Question 71

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In accounting for inventory, companies

A) cannot use the periodic inventory system under GAAP.
B) cannot use the periodic inventory system under IFRS.
C) cannot use the perpetual system under IFRS.
D) can use both periodic and perpetual inventory systems under GAAP and IFRS.
IFRS.

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Question 72

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Sales revenue should be recorded in accordance with the matching principle.

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Question 73

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All of the following are contra revenue accounts except

On November 2, 2018, Kasdan Company has cash sales of $6,000 from merchandise having a cost of $3,600. The entries to record the day's cash sales will include:

For each of the following, determine the missing amounts.

In the balance sheet, ending inventory is reported

Rae Company uses a perpetual inventory system and made a purchase of merchandise on credit from Tyree Corporation on August 3, for $9,000, terms 2/10, n/45. On August 10, Rae makes the appropriate payment to Tyree. The entry on August 10 for Rae Company is

Inventory is classified as a current asset in a classified balance sheet.

Prepare the necessary journal entries to record the following transactions, assuming Dakin Company uses a perpetual inventory system. (a) Purchased $35,000 of merchandise on account, terms 2/10, n/30. (b) Returned $700 of damaged merchandise for credit. (c) Paid for the merchandise purchased within 10 days.

All of the following items would be reported as other expenses and losses except

The income statement of Jue's Luggage includes the items listed below: Instructions Use the appropriate items listed above as a basis for determining: (a) Cost of goods sold. (b) Cost of goods available for sale. (c) Ending inventory.

Under IFRS, companies can choose which inventory system? IFRS.

As an incentive for customers to pay their accounts promptly, a business may offer its customers

If a company has sales revenue of $630,000, net sales of $600,000, and cost of goods sold of $390,000, the gross profit rate is

Freight terms of FOB Destination means that the seller pays the freight costs.

On October 1, Benji's Bicycle Store had an inventory of 20 ten speed bicycles at a cost of $200 each. During the month of October, the following transactions occurred. Oct. 4 $\quad$ Purchased 40 bicycles at a cost of $200 each from Monroe Bicycle Company, terms 1/10, n/30. $\quad$ 6 $\quad$ Sold 25 bicycles to Team Wisconsin for $330 each, terms 2/10, n/30. $\quad$ 7 $\quad$ Received credit from Monroe Bicycle Company for the return of 2 defective bicycles. $\quad$ 13 $\quad$ Issued a credit memo to Team Wisconsin for the return of a defective bicycle. $\quad$ 14 $\quad$ Paid Monroe Bicycle Company in full, less discount. Instructions Prepare the journal entries to record the transactions assuming the company uses a perpetual inventory system.

Income from operations will always result if

The acquisition of inventory is debited to the ____________ account when a perpetual inventory system is used.

A merchandising company using a perpetual inventory system will usually need to make an adjusting entry to ensure that the recorded inventory agrees with physical inventory count.

Gross profit does not appear