True or False
Credit terms are 2/20, n/EOM. You pay off your account in 17 days. You would not get the discount.
False
What is the account that is debited when you purchase inventory?
Merchandise Inventory
Cooper Trooper Company bought $2,900 of merchandise inventory on account. Freight and credit terms were FOB shipping point, 3/15, n/60
Merch Inventory 2900
Accounts Payable 2900
Everett Supply sold merchandise for $5,000, FOB destination, 2/10, n/30. The merchandise cost $3,200. Provide the journal entry showing Sales Revenue.
Accounts Receivable 5,000
Sales Revenue 5,000
Formula for Gross Profit
Net Sales Rev-COGS
What past president was rumored to have gotten stuck in a bathtub only to be removed after 6 people helped pry him out?
William Howard Taft
The selling company has to pay freight. This is called FOB...
Destination
Lee Loo La Company PAID freight in of $440.
Merchandise Inventory 440
Cash 440
Everett Supply sold merchandise for $5,000, FOB destination, 2/10, n/30. The merchandise cost $3,200. Provide the journal entry showing Cost of goods sold.
Cost of Goods Sold 3200
Merchandise Inventory 3200
Gross Profit/Net Sales Rev
If a purchasing company returns some of their goods, they would debit accounts payable on their journal entry.
True
Which account is typically a merchandiser's most major COST?
Cost of Goods Sold
Aden returned $600 of defective merchandise that had been purchased on Aug 5th
Accounts Payable 600
Merch Inventory 600
Myers Ridge Supply sold merchandise for $5,000, FOB destination, 2/10, n/30. The merchandise cost $3,200. Myers Ridge paid transportation costs of $100 to ship the goods to the customer. Provide the journal entry to record transportation cost.
Delivery Expense 100
Cash 100
How do you calculate Net Sales Revenue?
Net Sales Revenue - Sales Discounts - Sales Returns & Allowances
Under a periodic inventory system, you use bar codes to help keep track of inventory on hand.
False
The accounts that are adjusted to record inventory shrinkage are...
COGS and Merch Inventory
Marie Arnold Company paid for $2,900 of merchandise that was purchased on Aug 5th on account. No discount needed.
Accounts Payable 2900
Cash 2900
Pepper Rye Supply sold merchandise to a customer on account. 2 days later, the customer returned $1,000 of their purchased merchandise. That returned merchandise had cost $600. Provide both entries to show a return.
Sales Returns & Allowances 1000
Accounts Receivable 1000
Merchandise Inventory 600
COGS 600
A company had $15,000,000 in COGS. $38,000,000 in Net Sales Revenue. What is the Gross Profit Percentage?
60.5%
Freight in is added to the cost of merchandise inventory when using FOB shipping point.
True
When a customer does not pay for merchandise within the discount period, the selling company will credit this account.
Sales Discount Forfeited
William Harper paid for $2,900 worth of merchandise purchased 1 week earlier (7 days). After purchase, he returned $600 of merchandise. The credit terms were 2/15, n/60.
Record the payment entry.
Accounts Payable 2300
Cash 2254
Merch inventory 46
Oscar Meyer Hot Dogs sold merchandise for $6,000, FOB destination, 4/10, n/30. The merchandise cost $2,200. Record the journal entry to record receipt of payment within the discount period.
Cash 5760
Sales Discount 240
Accounts Receivable 6000
Calculate Gross Profit using the below info:
COGS: 34,300
Sales Revenue: 77,000
Sales Discounts: 1,500
Sales Returns & Allowances: 2,700
Merch Inventory: 6,300
38500