Merchandiser Inventory Purchases & Sales
The credit terms 3/15, n/30 means a ____% discount if the amount is paid within ____ days, or the full balance due in 30 days.
What are 3% and 15 days?
True or False:
GAAP requires inventory to be reported at retail value.
What is false?
It must be reported at the lower of cost or market.
All costs associated with obtaining inventory and getting it ready for sale are recorded to this account.
What is Merchandise Inventory?
For a service company, Revenues - Expenses equal this.
What is net income?
XYZ Company establishes a Petty Cash fund for $55. This is the journal entry to establish the fund.
What is debit Petty Cash $55 and credit Cash $55?
At the beginning of the period, Pebble Company had $14,000 of inventory. During the year, Pebble Company purchased $24,000 of merchandise and sold $10,000 of merchandise. A physical count of inventory at year-end shows $26,000 of inventory exists. This is the entry to record inventory shrinkage.
What is:
Cost of Goods Sold $2,000
Merchandise Inventory $2,000
?
A landscaping company has the following products in its ending inventory. They calculate the lower of cost or market for inventory applied separately to each product and then record a journal entry to adjust their inventory for this amount. (note, the entry amount, not the new inventory amount).
Stone - 20 units
Cost per unit: $5; Market per unit $ 6
Landscaping Pins - 500 units
Cost per unit: $1.25; Market per unit: $1.00
Rose Bushes - 40 units
Cost per unit $8; Market per unit $8.50
What is $125?
Stone: Cost 20x$5=$100; Market 20x$6=$120
Landscaping Pins: Cost 500x$1.25=$625; Market 500x$1.00=$500
Rose Bushes: Cost 40x$8=$320; Market 40x$8.50=$340
Total Cost:
$100+$625+$320=$1,045
LCM:
$100+$500+$320=$920
J/E is the difference: $1,045-$920=$125
Goods in transit are included in the buyer's inventory when they are on the delivery truck when the terms are FOB _________ _____________.
What is Shipping Point?
These are the three accounts from the following list that belong on the current assets section of a classified balance sheet:
Cash
Merchandise Inventory
Equipment
Accounts Receivable
Land
Long-Term Investments
What are Cash, Merchandise Inventory, and Accounts Receivable?
XYZ Company decides to increase their petty cash fund from $55 to $70. This is the journal entry to increase the fund.
What is debit Petty Cash $15 and credit Cash $15?
Sally Company purchased $16,000 of merchandise from their supplier with credit terms of 3/10, n/30, invoice dated December 9, and FOB shipping point. This is the journal entry for the purchase on December 9.
What is
Merchandise Inventory $16,000
Accounts Payable $16,000
?
Based on Smith Company's activity below, this is the cost of goods sold and the ending inventory based on the FIFO inventory costing method.
1/1 Beginning Inventory: 100 units @ $5.00
1/16 Purchased 20 units at a cost of $5.50
1/20 Purchased 25 units at a cost of $6.00
1/23 Sold 125 units for $8.00 each
What is:
COGS $640
Ending Inventory $120
?
A company had net sales of $325,000 and cost of goods sold of $105,000. This is the gross margin.
What is 68%?
Gross Margin = (Net Sales - Cost of Goods Sold) / Net Sales
Gross Margin = (325,000 - 105,000) / 325,000
A multiple-step income statement has these three main parts.
What are (1) gross profit, (2) income from operations, and (3) net income?
XYZ Company makes two purchases during the month of April in their petty cash fund:
2 boxes of pens (Office Supplies) $10
Shipping for one customer order $6
The petty cashier's drawer is also short by $4.
This is the journal entry to reimburse the petty cash fund.
What is:
debit Office Expenses $10
debit Shipping Expenses $6
debit Cash Over and Short $4
credit Cash $20
?
Sally Company purchased $16,000 of merchandise from their supplier with credit terms of 3/10, n/30, invoice dated December 9, and FOB shipping point. On December 13, they returned $3,000 of merchandise. This is the journal entry for Sally's merchandise return on December 13.
What is
Accounts Payable $3,000
Merchandise Inventory $3,000
?
Based on Smith Company's activity below, this is the cost of goods sold and the ending inventory based on the LIFO inventory costing method.
1/1 Beginning Inventory: 100 units @ $5.00
1/16 Purchased 20 units at a cost of $5.50
1/20 Purchased 25 units at a cost of $6.00
1/23 Sold 125 units for $8.00 each
What is:
COGS $660
Ending Inventory $100
?
Maria Company's sales were $550,000, sales discounts were $25,000, sales returns and allowances were $10,000, and cost of goods sold was $290,000. This is their gross profit.
What is $225,000?
Net Sales: Sales - Sales Discounts - Sales Returns and Allowances
$550,000 - $25,000 - $10,000 = $515,000
Gross Profit: Net Sales - COGS
$515,000 - $290,000 = $225,000
These are the five components of accounting systems.
What are source documents, input devices, information processors, information storage, and output devices?
Gems Inc. received their bank statement for the month of May.
-On April 30, the company’s Cash account has a $20,070 debit balance, but its May bank statement shows a $18,500 cash balance.
-Check Numbers 121 for $200 and 122 for $250 are outstanding checks as of May 31.
-Check Number 123 for May insurance was correctly written and cashed for $600 but was entered in the accounting records as $590 in error.
-The May statement shows the bank collected $5,000 cash on a note on behalf of the company.
- The May statement shows that a customer's $500 check for payment on their account was returned non-sufficient funds (NSF).
-The May statement shows a $10 bank service charge that has not been recorded in expenses yet.
-The cash collected for May 31 sales in the amount of $6,500 were put in the bank's deposit box after they closed for the day, so the deposit is not on the bank statement.
This is the adjusted book balance.
What is $24,550?
Book Balance $20,070
+ Proceeds from Note $5,000
- Check Amount Error $10 ($600-$590)
- NSF Returned Check $500
- Bank Service Fee $10
Adjusted Book Balance $24,550
Sally Company purchased $16,000 of merchandise from their supplier with credit terms of 3/10, n/30, invoice dated December 9, and FOB shipping point. On December 13, they returned $3,000 of merchandise. This is the journal entry when Sally sends a check on December 16, net of the discount and the returned merchandise.
What is
Accounts Payable $13,000
Merchandise Inventory $390
Cash $12,610
?
Based on Smith Company's activity below, this is the cost of goods sold and the ending inventory based on the Weighted Average inventory costing method.
1/1 Beginning Inventory: 100 units @ $5.00
1/16 Purchased 20 units at a cost of $5.50
1/20 Purchased 25 units at a cost of $6.00
1/23 Sold 125 units for $8.00 each
What is:
COGS $655
Ending Inventory $105
?
Calculations:
$760 total cost/145 units available=$5.24 per unit
$5.24 per unit x 125 units = $655
XYZ Company had the following data for the year:
This is their inventory turnover.
What is 6.25?
Calculations:
Cost of Goods Sold/Average Inventory
$250,000/$40,000=6.25
Average Inventory=(Beginning Inventory/Ending Inventory)/2
($50,000+$30,000)/2 = $80,000/2 = $40,000
Maria Merchandisers had a beginning inventory of 500 units costing $1,125. They purchased 100 additional units for $225 and sold 350 units for $1,750 This is the goods available for sale.
What is $1,350?
When reconciling a bank statement, out of the list below these are the items that require a journal entry and these are what the journal entries look like:
1) Deposit was dropped off overnight and is not on the bank statement
2) The bank statement shows an $8 bank service charge that has not been recorded in expenses yet.
3) Check Number 22 for insurance was correctly written and cashed for $285 but was entered in the accounting records as $300 in error.
4) There are three outstanding checks totaling $500
What are:
2) Debit Miscellaneous Expense $8, Credit Cash $8
3) Debit Cash $15, Credit Insurance Expense $15
?
Note:
1) and 4) no entry needed - adjustment to the bank balance, NOT the book balance