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SHORT-ANSWER ESSAY QUESTIONS S-A E  238 A merchandiser frequently has a need to use contra accounts related to the sale of goods. Identify the contra accounts that have normal debit balances and explain why they are not considered expenses. S-A E  239 Distinguish between FOB shipping point and FOB destination. Identify the freight terms.
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TRUE-FALSE STATEMENTS 1.Retailers and wholesalers are both considered merchandisers. 2.The steps in the accounting cycle are different for a merchandising company than for a service company. 3.Sales minus operating expenses equals gross profit. 4.Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs. 5.A periodic inventory system requires.
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MATCHING 228.Match the items below by entering the appropriate code letter in the space provided. A.WorksheetF.Common Stock B.Permanent accountsG.Current assets C.Closing entriesH.Operating cycle D.Income SummaryI.Long-term liabilities E.Reversing entryJ.Correcting entries _____              1.Obligations that a company expects to pay after one year. _____              2.A part of owners’ equity in a corporation. _____              3.An optional tool which facilitates the preparation of financial.
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153.The Freight-In account a.increases the cost of merchandise purchased. b.is contra to the Purchases account. c.is a permanent account. d.has a normal credit balance. a154.Net purchases plus freight-in determines a.cost of goods sold. b.cost of goods available for sale. c.cost of goods purchased. d.total goods available for sale. a155.Geoffrg Company has the following account balances: a.$102,000. b.$82,000. c.$90,000. d.$94,000. a156.Bradshaw Shoe Store has a beginning.
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93.When goods are returned that relate to a prior cash sale, a.the Sales Returns and Allowances account should not be used. b.the cash account will be credited. c.Sales Returns and Allowances will be credited. d.Accounts Receivable will be credited. 94.The Sales Returns and Allowances account does not provide information to management about a.possible inferior merchandise. b.the percentage.
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a163.Mantle Company’s accounting records show the following at the year ending on December 31, 2016: a.$380,900. b.$423,000. c.$403,000. d.$413,600. a164.Mantle Company’s accounting records show the following at the year ending on December 31, 2016: a.$423,600. b.$392,400. c.$403,000. d.$413,600. 165.Caine Company has sales revenue of $74,000, cost of goods sold of $42,000 and operating expenses of $17,000 for the year ended.
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113.Chen Company’s financial information is presented below. a.$890,000$340,000 b.$810,000$340,000 c.$890,000$300,000 d.$810,000$380,000 114.The sales revenue section of an income statement for a retailer would not include a.Sales discounts. b.Sales revenue. c.Net sales. d.Cost of goods sold. 115.The operating expense section of an income statement for a wholesaler would not include a.freight-out. b.utilities expense. c.cost of goods sold. d.insurance expense. 116.Income from operations will always result if a.the.
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Ex. 211 The following information is available for Liu Company:     Debit                    Credit    Owner’s Capital$  50,000 Owner’s Drawings$  23,000 Sales Revenue500,000 Sales Returns and Allowances20,000 Sales Discounts7,500 Cost of Goods Sold302,000 Freight-Out2,300 Advertising Expense15,000 Interest Expense19,200 Salaries and Wages Expense53,000 Utilities Expense18,000 Depreciation Expense9,000 Interest Revenue18,000 Instructions Using the above information, prepare the closing entries for Liu Company. Ex. 212 The adjusted trial balance of J. W..
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S-A E 243 The income statement for a merchandising company presents five amounts not shown on a service company’s income statement. Identify and briefly explain the five unique amounts. S-A E  244(Ethics) Holmes Corporation manufactures electronic components for use in many consumer products. Their raw materials are purchased literally from all over the.
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aBE 198 For each of the following, determine the missing amounts.Beginning   Goods AvailableCost ofEndingInventoryPurchases    for Sale    Goods SoldInventory 1.$10,000________$  45,000$25,000_______ 2.  ______$220,000$265,000_______$40,000 aBE 199 Assume that Blaque Company uses a periodic inventory system and has these account balances: Purchases $532,000; Purchase Returns and Allowances $16,000; Purchase Discounts $8,000; and Freight-In $17,000. Determine net purchases and.
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Ex. 204 On September 1, Reid Supply had an inventory of 15 backpacks at a cost of $20 each. The company uses a perpetual inventory system. During September, the following transactions and events occurred. Sept.4Purchased 70 backpacks at $20 each from Hunter, terms 2/10, n/30. Sept.6Received credit of $100 for the return of.
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TRUE-FALSE STATEMENTS 1.Transactions that affect inventories on hand have an effect on both the balance sheet and the income statement. 2.The more inventory a company has in stock, the greater the company's profit. 3.Raw materials inventories are the goods that a manufacturer has completed and are ready to be sold to customers. 4.Goods that.
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Ex. 215 Presented below is information for Oakley Company for the month of March 2016. Cost of goods sold$254,000Rent expense$  36,000 Freight-out7,500Sales discounts8,800 Insurance expense5,000Sales returns and allowances11,000 Salaries and wages expense75,000Sales revenue425,000 Instructions (a)Prepare a multiple -step income statement. (b)Compute the gross profit rate. Ex. 216 In 2016, Rondelli Company had net sales of $650,000 and cost of goods.
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123.All of the following items would be reported as other expenses and losses except a.freight-out. b.casualty losses. c.interest expense. d.loss from employees’ strikes. 124.If a company has net sales of $600,000 and cost of goods sold of $372,000, the gross profit percentage is a.22%. b.38%. c.62%. d.100%. 125.A company shows the following balances: a.34% b.46% c.66% d.54% 126.The gross profit rate is computed by dividing.
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aEx. 215 Transaction and adjustment data for Ortiz Company for the calendar year end is as follows: 1.December 24 (initial salary entry): $15,000 of salaries earned between December 1 and December 24 are paid. 2.December 31 (adjusting entry): Salaries earned between December 25 and December 31 are $4,500. These will be paid in.
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83.In a perpetual inventory system, the Cost of Goods Sold account is used a.only when a cash sale of merchandise occurs. b.only when a credit sale of merchandise occurs. c.only when a sale of merchandise occurs. d.whenever there is a sale of merchandise or a return of merchandise sold. 84.Sales revenues are usually considered earned.
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63.Freight costs paid by a seller on merchandise sold to customers will cause an increase a.in the selling expense of the buyer. b.in operating expenses for the seller. c.to the cost of goods sold of the seller. d.to a contra-revenue account of the seller. 64.Paden Company purchased merchandise from Emmett Company with freight terms of.
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21.Inventory is classified as a current asset in a classified balance sheet. 22.Gain on sale of equipment and interest expense are reported under other revenues and gains in a multiple-step income statement. 23.The gross profit section for a merchandising company appears on both the multiple-step and single-step forms of an income statement. 24.In.
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133.Financial information is presented below: a.$17,000. b.$82,000. c.$155,000. d.$220,000. 134.Financial information is presented below: a..077. b..400. c..627. d..923. 135.Financial information is presented below: a.$147,600. b.$57,600. c.$270,000. d.$187,600. 136.Financial information is presented below: a..590. b..410. c..469. d..531. 137.Financial information is presented below: a.$320,000. b.$332,000. c.$338,000. d.$350,000. 138.Financial information is presented below: a.$51,200. b.$144,000. c.$156,000. d.$174,000. 139.Financial information is presented below: a..356. b..450. c..146. d..497. 140.If a company has sales revenue of $634,000, net sales of $600,000, and cost of goods sold of $378,000, the gross profit.
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Ex. 207 An inexperienced accountant for Lamont Company made the following errors in recording merchandising transactions. 1.A $220 refund to a customer for faulty merchandise was debited to Sales Revenue $220 and credited to Cash $220. 2.A $130 credit purchase of supplies was debited to Inventory $130 and credited to Cash $130. 3.A $140.
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MULTIPLE CHOICE QUESTIONS 43.Net income is gross profit less a.financing expenses. b.operating expenses. c.other expenses and losses. d.other expenses. 44.An enterprise which sells goods to customers is known as a a.proprietorship. b.corporation. c.retailer. d.service firm. 45.Which of the following would not be considered a merchandising company? a.Retailer b.Wholesaler c.Service firm d.Dot Com firm 46.A merchandising company that sells directly to consumers is a a.retailer. b.wholesaler. c.broker. d.service company. 47.Two categories of.
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S-A E  245(Communication) Helen Hunt and Cory Coates, two salespersons in adjoining territories, regularly compete for bonuses. During the last month, their dollar volume of sales, on which the bonuses are based, was nearly equal. On the last day of the month, both made a large sale. Both orders were shipped.
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Ex. 206 (a)Karns Company purchased merchandise on account from Bailey Office Suppliers for $174,000, with terms of 2/10, n/30. During the discount period, Karns returned some merchandise and paid $156,800 as payment in full. Karns uses a perpetual inventory system. Prepare the journal entries that Karns Company made to record: (1)the purchase.
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S-A E  235(Communication) You have recently started to work for Thom Hanks, manufacturers of cemetery markers and monuments. During your first month at work, you inadvertently recorded as revenue, about $6,000 of prepayments from Ledger Company. The financial statements had been released within the company when you discovered your error. The.
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103.Which of the following accounts has a normal credit balance? a.Sales Returns and Allowances b.Sales Discounts c.Sales Revenue d.Selling Expense 104.With respect to the income statement, a.contra-revenue accounts do not appear on the income statement. b.sales discounts increase the amount of sales. c.contra-revenue accounts increase the amount of operating expenses. d.sales discounts are included in the calculation of gross.
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143.During August, 2016, Shelby’s Supply Store generated revenues of $65,000. The company’s expenses were as follows: cost of goods sold of $33,000 and operating expenses of $7,000. The company also had rent revenue of $2,000 and a loss on the sale of a delivery truck of $3,000. a.$0. b.$(3,000). c.$2,000. d.$(1,000). 144.During August, 2016, Shelby’s.
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Ex. 210 Newell Company completed the following transactions in October:        Credit Sales           Sales Returns    Date of   Date   Amount  Terms     Date  AmountCollection Oct.3$  6002/10, n/30Oct.8 Oct.111,7003/10, n/30Oct. 14$  400Oct.16 Oct.175,0001/10, n/30Oct. 201,000Oct.29 Oct.211,4002/10, n/60Oct. 23200Oct.27 Oct.232,3002/10, n/30Oct. 27400Oct.28 Instructions (a)Indicate the cash received for each collection. Show your calculations. (b)Prepare the journal entry for the (1)Oct. 17 sale. The merchandise.
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11.Sales Returns and Allowances and Sales Discounts are both designed to encourage customers to pay their accounts promptly. 12.To grant a customer a sales return, the seller credits Sales Returns and Allowances. 13.A company’s unadjusted balance in Inventory will usually not agree with the actual amount of inventory on hand at year-end. 14.For.
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COMPLETION STATEMENTS               227.A ________________ buys and sells goods rather than performing services to earn a profit.               228.Cost of goods sold is deducted from net sales revenue for the period in order to arrive at ________________.               229.Inventory on hand can be obtained from detailed inventory records when a ________________ inventory system.
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BE 194 Charlie Company uses a perpetual inventory system. During May, the following transactions and events occurred. May13Sold 8 motors at a cost of $45 each to Scruffy Brothers Supply Company, terms 4/10, n/30. The motors cost Charlie $26 each. May16One defective motor was returned to Charlie. May 23Received payment in full from Scruffy.
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MATCHING 237.Match the items below by entering the appropriate code letter in the space provided. A.Net salesF.FOB shipping point B.Sales discountsG.Freight-out C.Purchase invoiceH.Gross profit D.Periodic inventory systemI.Operating expenses E.FOB destinationJ.Income from operations _____              1.An incentive to encourage customers to pay their accounts early. _____              2.Expenses incurred in the process of earning sales revenue. _____              3.Freight terms that require the.
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Ex. 218 Instructions State the missing items identified by ?.               1.Gross profit – Operating expenses = ?               2.Cost of goods sold + Gross profit on sales = ?               3.Sales Revenue – (? + ?) = Net sales               4.Income from operations + ? – ? = Net income               5.Net sales – Cost of.
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53.Detailed records of goods held for resale are not maintained under a a.perpetual inventory system. b.periodic inventory system. c.double entry accounting system. d.single entry accounting system. 54.A perpetual inventory system would likely be used by a(n) a.automobile dealership. b.hardware store. c.drugstore. d.convenience store. 55.Which of the following is a true statement about inventory systems? a.Periodic inventory systems require more detailed inventory.
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173.In the balance sheet, ending inventory is reported a.in current assets immediately following accounts receivable. b.in current assets immediately following prepaid expenses. c.in current assets immediately following cash. d.under property, plant, and equipment. a174.Cost of goods available for sale is computed by adding a.freight-in to net purchases. b.beginning inventory to net purchases. c.beginning inventory to purchases and freight-in. d.beginning.
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Ex. 225 The income statement of Leang’s Luggage includes the items listed below: Net sales$875,000 Gross profit305,000 Beginning inventory75,000 Purchase discounts12,000 Purchase returns and allowances8,000 Freight-in10,000 Operating expenses320,000 Purchases560,000 Instructions Use the appropriate items listed above as a basis for determining: (a)Cost of goods sold. (b)Cost of goods available for sale. (c)Ending inventory. aEx. 226 Prepare the necessary journal entries to record the following transactions, assuming.
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Ex. 205 Peter O’Toole is a new accountant with First Step Company. First Step purchased merchandise on account for $18,000. The credit terms are 2/10, n/30. Peter has talked with the company’s banker and knows that he could earn 5% on any money invested in the company’s savings account. Instructions (a)Should Peter pay.
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BRIEF Exercises BE 190 Presented here are the components in Bradley Company’s income statement. Determine the missing amounts. Sales Cost ofGrossOperatingNet RevenueGoods Sold_Profit ExpensesIncome $75,000(a)$35,000(b)$17,000 (c)$86,000$59,000$48,000(d) BE 191 Prepare the necessary journal entries on the books of Magic Carpet Company to record the following transactions, assuming a perpetual inventory system (you may omit explanations): (a)Magic purchased $49,000 of.
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73.McIntyre Company made a purchase of merchandise on credit from Marvin Company on August 8, for $11,000, terms 3/10, n/30. On August 17, McIntyre makes the appropriate payment to Marvin. The entry on August 17 for McIntyre Company is: a.Accounts Payable11,000 b.Accounts Payable10,670 c.Accounts Payable11,000 d.Accounts Payable11,000 74.On July 9, Elijah Company sells goods on.
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aEx. 222 Three items are missing in each of the following columns and are identified by letter. Sales revenue$        (a)$840,000 Sales returns and allowances15,00022,000 Sales discounts10,00015,000 Net sales440,000(d) Beginning inventory(b)300,000 Cost of goods purchased220,000(e) Ending inventory170,000303,000 Cost of goods sold252,000575,000 Gross profit(c)(f) Ex. 222(Cont.) Instructions   .
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Exercises Ex. 202 For each of the following, determine the missing amounts.Sales Cost of  GrossOperatingNet RevenueGoods Sold_Profit ExpensesIncome 1.$100,000_______________$30,000$12,0002.________$135,000$125,000_______$80,000 Ex. 203 On October 1, Lance’s Bicycle Store had an inventory of 20 ten speed bicycles at a cost of $350 each. During the month of October, the following transactions occurred. Oct.4Purchased 40 bicycles at a cost.
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COMPLETION STATEMENTS               216.The first step in preparing a worksheet is to prepare a ______________ from the general ledger accounts.               217.The account balances appearing in the adjusted trial balance columns are extended to the ______________ columns and the ______________ columns.               218.The process of transferring net income (or loss) for the period.
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SHORT-ANSWER ESSAY QUESTIONS S-A E  229 A worksheet is an optional working tool used by accountants to facilitate the preparation of financial statements. Consider the steps followed in preparing a worksheet. How does the use of a worksheet assist the accountant? Could financial statements be prepared without a worksheet?  Evaluate how the.
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aEx. 223 Brahma Supply Company uses a periodic inventory system. During September, the following transactions and events occurred. Sept.3Purchased 70 backpacks at $50 each from South Slope Company, terms 2/10, n/30. Sept.6Received credit of $300 for the return of 6 backpacks purchased on Sept. 3 that were defective. Sept.9Sold 15 backpacks for $84 each.
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S-A E  241 In a single-step income statement, all data are classified under two categories: (1) Revenues, or (2) Expenses. If the income statement is recast in a multiple-step format, what additional information or intermediate components of income would be presented? S-A E  242 You are at a company picnic and the company.
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S-A E  232 (a)What is the term used to describe the owner’s equity section of a corporation? (b) Identify the two owners’ equity accounts in a corporation and indicate the purpose of each. S-A E  233 Distinguish between a reversing entry and an adjusting entry. Are reversing entries required? S-A E  234(Ethics) Under Protection provides.
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Ex. 213 Bush Company had the following account balances at year-end: cost of goods sold $85,000; inventory $15,000; operating expenses $29,000; sales revenue $135,000; sales discounts $1,300; and sales returns and allowances $2,600. A physical count of inventory determines that inventory on hand is $14,100. Instructions (a)Prepare the adjusting entry necessary as a.
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a31.Freight-in is an account that is subtracted from the Purchases account to arrive at cost of goods purchased. a32.Under a periodic inventory system, the acquisition of inventory is charged to the Purchases account. a33.Under a periodic inventory system, freight-in on merchandise purchases should be charged to the Inventory account. a34.Purchase Returns and Allowances.
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Ex. 217 Bolivia Company gathered the following condensed data for the year ended December 31, 2016: Cost of goods sold$   760,000 Net sales1,400,000 Operating expenses277,000 Interest expense43,000 Dividend revenue40,000 Casualty loss from vandalism125,000 Instructions 1.Prepare a single-step income statement for the year ended December 31, 2016. 2.Prepare a multiple-step income statement for the year ended December 31, 2016. .
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Ex. 220 The following information is available for Sheldon Leonard Company: Operating expenses$  85,000Cost of goods sold  200,000Sales revenue  325,000 Sales returns and allowances16,000 InstructionsCompute each of the following:(a)Net sales(b)Gross profit(c)Income from operations aEx. 221 The adjusted trial balance of Bon Jovi Music Company appears below. Bon Jovi Music Company prepares monthly financial statements and uses.
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