Financial Statements
What is the equation used for the income statement?
Net Income = Revenue - Expenses
When a business buys products to sell, what asset account is used?
Merchandise Inventory (Inventory)
What does 4/15, n/eom mean?
Discount of 4% due in 15 days, or the whole amount due at the end of month.
What asset account is used in the perpetual inventory system for your products on the shelf?
Merchandise Inventory
The equation to find the increase in owner's equity is...
Investments + Net Income - Withdrawals
What type of account is Sales Tax Payable and what is it's normal balance?
Liability, Normal Credit Balance
Merchandise was sold at $1,000, but the billing terms were 2/15, n/30. If the customer pays within the discount period, how much do they have to pay?
$980
In FOB Shipping Point, when is ownership (title) passed over to the buyer of the merchandise?
When it is delivered to freight carrier. (Put on the truck.)
What classification would Land, Delivery Equipment, and Furniture fall under on a balance sheet?
Noncurrent assets
What is the journal entry for the Red Owl purchasing $750 worth of merchandise for cash?
DR Merchandise Inventory $750
CR Cash $750
On August 1, merchandise was sold for $857, with the billing terms were 1/10, n/30. The invoice was dated August 5 and the customer paid on August 25. How much do they have to pay?
$857
In FOB Destination, who are transportation costs paid by?
Total Liabilities is $13,500. Total Liabilities and Owner's Equity is $20,200. If there is only one owner, how much is the owner's capital in the business?
$6,700
The Red Owl sold $800 in merchandise to a cash customer. The cost of the merchandise sold was $500. What are the journal entries for this transaction?
DR Cash $800
CR Sales $800
DR Cost of Merchandise Sold $500
CR Merchandise Inventory $500
A customer purchased $1,000 worth of merchandise on account, terms 1/10, n/15. If the customer paid the invoice within the discount window, what are the journal entries for this payment transaction?
DR Cash $990
CR A/R $990
Cost of Merchandise Sold (COMS)could also be called what?
Cost of Goods Sold (COGS) or Cost of Revenue
Sales are $250,150. Cost of merchandise sold is $104,900. How much is gross profit?
$145,250
A company accepted a return of $100 worth of merchandise from a cash customer. The cost of the merchandise returned was $40. If the customer received a cash refund, what are the journal entries for this transaction?
DR Customer Refunds Payable $100
CR Cash $100
DR Merchandise Inventory $40
CR Cost of Merchandise Sold $40
A business sold $15,000 of merchandise to a customer on a store account. The terms of the sale are 3/15, n/30. The cost of merchandise sold was $13,500. What are the journal entries for the sale of merchandise?
DR A/R $14,550
CR Sales $14,550
DR COMS $13,500
CR MI $13,500
A company purchased $4,000 worth of merchandise on account with terms 1/15, n/30 and FOB shipping point. The freight costs of $100 were prepaid by the seller and added to the invoice. What is the journal entry for this transaction?
CR A/P $4,060