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Chapter 5: Q5-2RQ (page 294)
What are the two types of merchandisers? How do they differ?
The merchandisers are generally classified into categories: Wholesalers and retailers.
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Match the accounting terms with the corresponding definitions.
1. Credit Terms a. The cost of the merchandise inventory that the business has sold to customers.
2. FOB Destination b. An amount granted to the purchaser as an incentive to keep goods that are not 鈥渁s ordered.鈥�
3. Invoice c. A type of merchandiser that buys merchandise either from a manufacturer or a wholesaler and then sells those goods to consumers.
4. Cost of Goods Sold d. A situation in which the buyer takes ownership (title) at the delivery destination point.
5. Purchase Allowance e. A type of merchandiser that buys goods from manufacturers and then sells them to retailers.
6. FOB Shipping Point f. A discount that businesses offer to purchasers as an incentive for early payment.
7. Wholesaler g. A situation in which the buyer takes title to the goods after the goods leave the seller鈥檚 place of business.
8. Purchase Discount h. The terms of purchase or sale as stated on the invoice.
9. Retailer i. A seller鈥檚 request for cash from the purchaser.
What are the four steps involved in the closing process for a merchandising company?
The adjusted trial balance of Quality Office Systems at March 31, 2018, follows:
Requirements
1. Journalize the required closing entries at March 31, 2018.
2. Set up T-accounts for Income Summary; Retained Earnings; and Dividends. Post the closing entries to the T-accounts, and calculate their ending balances.
3. How much was Quality Office鈥檚 net income or net loss?
Camilia Communications reported the following figures from its adjusted trial balance for its first year of business, which ended on July 31, 2018:
Cash \( 2,900 Cost of Goods Sold \) 18,700
Selling Expenses 1,400 Equipment, net 9,500
Accounts Payable 4,300 Accrued Liabilities 1,800
Common Stock 4,365 Net Sales Revenue 29,200
Notes Payable, long-term 500 Accounts Receivable 3,200
Merchandise Inventory 1,100 Interest Expense 65
Administrative Expenses 3,300
Prepare Camilia Communication鈥檚 multi-step income statement for the year ended July 31, 2018.
Journalize the following transactions that occurred in January 2018 for Sylvia鈥檚 Amusements. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Sylvia estimates sales returns at the end of each month.
Jan. 4 Purchased merchandise inventory on account from Vanderbilt Company, \(7,000. Terms 1/10, n/EOM, FOB shipping point.
6 Paid freight bill of \)100 on January 4 purchase.
8 Returned half the inventory purchased on January 4 from Vanderbilt Company.
10 Sold merchandise inventory for cash, \(1,600. Cost of goods, \)640. FOB destination.
11 Sold merchandise inventory to Graceland Corporation, \(10,800, on account, terms of 1/10, n/EOM. Cost of goods, \)5,400. FOB shipping point.
12 Paid freight bill of \(60 on January 10 sale.
13 Sold merchandise inventory to Cabbell Company, \)9,500, on account, terms of n/45. Cost of goods, \(5,225. FOB shipping point.
14 Paid the amount owed on account from January 4, less return and discount.
17 Received defective inventory as a sales return from the January 13 sale, \)600. Cost of goods, \(300.
18 Purchased inventory of \)4,600 on account from Roberts Corporation. Payment terms were 3/10, n/30, FOB destination.
20 Received cash from Graceland Corporation, less discount.
26 Paid amount owed on account from January 18, less discount.
28 Received cash from Cabbell Company, less return.
29 Purchased inventory from Sandra Corporation for cash, \(11,600, FOB shipping point. Freight in paid to shipping company, \)240.
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