Exam (elaborations)
Accounting Chapter 4 Smartbook (1).
Accounting Chapter 4 Smartbook (1).
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Accounting Chapter 4 SmartbookOn Jan 5, a customer returned merchandise that had been purchased earlier on
credit. The original sale was for $500, and the cost to the seller was $150.
Demonstrate the required journal entry to record the return on the books of the seller,
assuming the goods can be sold to another customer. - CORRECT ANSWER-Debit
Sales Returns and Allowances $500; debit Merchandise Inventory $150; credit
Accounts Receivable $500; and credit Cost of Goods Sold $150.
On Dec. 20, X-Mart received a $100 allowance because the merchandise it
purchased on account, earlier in the month, was of poor quality. Demonstrate the
required journal entry on X-Mart's books for the allowance assuming the perpetual
inventory method. - CORRECT ANSWER-Debit Accounts Payable $100; credit
Merchandise Inventory $100.
Which of the statements below summarizes what the acid-test ratio measures? -
CORRECT ANSWER-The acid-test ratio measures a merchandiser's ability to pay its
current liabilities
If the seller is responsible for the shipping costs of merchandise sold, the shipping
terms will be specified as: - CORRECT ANSWER-FOB destination
Assume that X-Men has an unadjusted Accounts Receivable balance of $10,000 and
Allowance for Sales Discounts balance of $0. $1,000 of accounts receivable are
within the 2% discount period and X-Men expects that buyers will take $20 in
future-period discounts arising from this period's sales. The adjusting entry for sales
discounts is: - CORRECT ANSWER-Debit Sales Discounts and credit Allowance for
Sales Discounts for $20
Which of the following equations correctly identify the cost flow of a merchandising
company? - CORRECT ANSWER-Net purchases plus beginning inventory equals
merchandise available for sale
Identify the statements below that are correct regarding the closing entries for a
merchandiser using the perpetual inventory system. - CORRECT ANSWER--The
Dividends account is closed to Retained Earnings
-Sales Returns and Allowances is closed with the expense accounts.
-Sales is closed as a revenue account.
-Cost of goods sold is closed with the expense accounts.
-Sales Discounts is closed with the expense accounts.
Dogs R US uses the perpetual inventory system to account for its merchandise. A
customer returned merchandise. Assuming that the purchase was originally bought
on credit for $400 with a cost to Dogs R US of $100, demonstrate required journal
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