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Maia's Bike Shop uses the perpetual inventory system and had the following transactions during the month of May: Maia's Bike Shop uses the perpetual inventory system and had the following transactions during the month of May: Prepare the required journal entries that Maia's Bike Shop must make to record these transactions. Prepare the required journal entries that Maia's Bike Shop must make to record these transactions.

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A perpetual inventory system continually updates accounting records for inventory transactions.

A) True
B) False

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What does FOB stand for? Differentiate between FOB shipping point (or FOB factory) and FOB destination?

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FOB stands for free on board. If goods a...

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Gross profit is the same as gross margin.

A) True
B) False

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Match the following definitions and terms

Premises
The description of the amounts and timing of payments from a buyer to a seller.
Net sales less cost of goods sold.
The amount of time allowed before full payment is due.
An accounting method that continually updates accounting records for merchandise transactions.
A notification that the sender has debited the recipient's account kept by the sender.
A cash discount granted to customers for paying within the discount period.
The expenses of promoting sales, by displaying and advertising merchandise, making sales, and delivering goods to customers.
An accounting method that updates the accounting records for merchandise transactions only at the end of a period.
The time period in which a cash discount is available and a reduced payment can be made by the buyer.
A notification that the sender has credited the recipient's account kept by the sender.
Responses
Perpetual inventory system
Periodic inventory system
Discount period
Debit memorandum
Selling expenses
Credit memorandum
Sales discount
Gross profit
Credit terms
Credit period

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The description of the amounts and timing of payments from a buyer to a seller.
Net sales less cost of goods sold.
The amount of time allowed before full payment is due.
An accounting method that continually updates accounting records for merchandise transactions.
A notification that the sender has debited the recipient's account kept by the sender.
A cash discount granted to customers for paying within the discount period.
The expenses of promoting sales, by displaying and advertising merchandise, making sales, and delivering goods to customers.
An accounting method that updates the accounting records for merchandise transactions only at the end of a period.
The time period in which a cash discount is available and a reduced payment can be made by the buyer.
A notification that the sender has credited the recipient's account kept by the sender.

When preparing an unadjusted trial balance using a periodic inventory system, the amount shown for merchandise inventory is:


A) The ending inventory amount.
B) The beginning inventory amount.
C) Equal to the cost of goods sold.
D) Equal to the cost of goods purchased.
E) Equal to the gross profit.

F) C) and E)
G) A) and B)

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Accounting and reporting for merchandise purchases and sales are treated identically under both GAAP and IFRS.

A) True
B) False

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A company's quick assets are $147,000 and its current liabilities are $143,000. This company's acid-test ratio is 1.03 (rounded to two decimals).

A) True
B) False

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Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year: Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year: Prepare the closing entries at December 31 for the current year. Prepare the closing entries at December 31 for the current year.

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Cost of goods sold:


A) Is another term for merchandise sales.
B) Is the cost of merchandise sold to customers.
C) Is another term for revenue.
D) Is also called gross margin.
E) Is a term only used by service firms.

F) A) and B)
G) B) and E)

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A _______________________ is a document the buyer issues to inform the seller of a debit made to the seller's account in the buyer's records.

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Cost of goods sold represents the value of merchandise sold to customers.

A) True
B) False

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Each sales transaction of a seller that uses a perpetual system involves recognizing both revenue and cost of merchandise sold.

A) True
B) False

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On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the perpetual inventory system. Alberts pays the invoice on October 8 and takes the appropriate discount. The journal entry that Robertson makes on October 8 is:


A)  Cash 5,800 Accounts Receivable 5,800\begin{array}{|c|r|r|}\hline \text { Cash } & 5,800 & \\\hline \text { Accounts Receivable } & & 5,800 \\\hline\end{array}
B)  Cash 4,000 Accourts Receivable 4,000\begin{array} { | l | r | r | } \hline \text { Cash } & 4,000 & \\\hline \text { Accourts Receivable } & & 4,000 \\\hline\end{array}
C)  Cash 3,920 Sales Discourts 80 Accourits Receivable 4,000\begin{array} { | c | r | r | } \hline \text { Cash } & 3,920 & \\\hline \text { Sales Discourts } & 80 & \\\hline \text { Accourits Receivable } & & 4,000 \\\hline\end{array}
D)  Cash 5,684 Accourts receivable 5,684\begin{array} { | l | r | r | } \hline \text { Cash } & 5,684 & \\\hline \text { Accourts receivable } & & 5,684 \\\hline\end{array}
E)  Cash 5,684 Sales Discourts 116 Accourits Receivable 5,800\begin{array} { | c | r | r | } \hline \text { Cash } & 5,684 & \\\hline \text { Sales Discourts } & 116 & \\\hline \text { Accourits Receivable } & & 5,800 \\\hline\end{array}

F) B) and C)
G) All of the above

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Merchandise inventory consists of products that a company acquires to resell to customers.

A) True
B) False

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A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers.

A) True
B) False

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Maia's Bike Shop uses the periodic inventory system and had the following transactions during the month of May: Maia's Bike Shop uses the periodic inventory system and had the following transactions during the month of May: Prepare the required journal entries that Maia's Bike Shop must make to record these transactions. Prepare the required journal entries that Maia's Bike Shop must make to record these transactions.

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A company has sales of $2,530,000, sales discounts of $200,000, sales returns and allowances of $323,000, shipping charges of $115,000, sales commissions of $234,000, net income of $863,500, and cost of goods sold of $1,012,000. What is the gross profit/margin for the period?

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A merchandising company:


A) Earns net income by buying and selling merchandise.
B) Receives fees only in exchange for services.
C) Earns profit from commissions only.
D) Earns profit from fares only.
E) Buys products from consumers.

F) C) and D)
G) D) and E)

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On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the perpetual inventory system. The journal entry or entries that Robertson will make on October 1 is:


A)  Sales 5,800 Accounts Receivable 5,800\begin{array}{|c|r|r|}\hline \text { Sales } & 5,800 & \\\hline \text { Accounts Receivable } & & 5,800 \\\hline\end{array}
B)  Sales 5,800 Accourts Receivable 5,800 Cost of Goods Sold 4,000 Merchardise Irventory 4,000\begin{array} { | c | r | r | } \hline \text { Sales } & 5,800 & \\\hline \text { Accourts Receivable } & & 5,800 \\\hline \text { Cost of Goods Sold } & 4,000 & \\\hline \text { Merchardise Irventory } & & 4,000 \\\hline\end{array}
C)  Accounts Receivable 5,800 Sales 5,800\begin{array} { | c | r | r | } \hline \text { Accounts Receivable } & 5,800 & \\\hline \text { Sales } & & 5,800 \\\hline\end{array}
D)  Accourts Receivable 5,800 Sales 5,800 Cost of Goods Sold 4,000 Merchardise Irventory 4,000\begin{array} { | c | r | r | } \hline \text { Accourts Receivable } & 5,800 & \\\hline \text { Sales } & & 5,800 \\\hline \text { Cost of Goods Sold } & 4,000 & \\\hline \text { Merchardise Irventory } & & 4,000 \\\hline\end{array}
E)  Accounts receivable 4,000 Sales 4,000\begin{array} { | c | r | r | } \hline \text { Accounts receivable } & 4,000 & \\\hline \text { Sales } & & 4,000 \\\hline\end{array}

F) A) and D)
G) C) and E)

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