Homework Answers
1. The freight in expense paid under Perpetual inventory system, Inventory Account will be debited with the amount of expenses incurred.
2. Yes. The operating cycle of a merchandising company is normally longer than that of a service firm. the differences in the operating cycles are:
- Operating cycle of Merchandising company: Cash -> Buy inventory - > Sell inventory (often on account) -> AR -> Receive payments.
- Operating cycle of Service company: Cash -> perform Service -> Receive payments.
3. Yes. Goods in transit which are shipped FOB destination have to be included in the Inventory of Seller. Hence he has to include these goods in their physical inventory count.
4. EFT refers to Electronic Fund Transfer. It refers to transfer of funds between companies electronically in computerised networking architecture .Companies prefer EFTs as they:
- decreases costs
- increases efficiency
- simple and reliable
- safe and secured
5. The allowance for bad debts is a contra-asset account that cut downs the account receivables amounts to what is very likely to be receivable than what was recorded to be received. Thus it reflects the true receivables position and also matches the expenses ie bad debts with the income ie sales of the same accounting period.
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8. SHORT ANSWERS 19 Marks) When the buyer pays the freight costs, which account would be...
1. The abbreviation "FOB stands for (a) free on board. freight on board. free only (10) buyer. (d) freight charge o...
1. The abbreviation "FOB stands for (a) free on board. freight on board. free only (10) buyer. (d) freight charge on buyer. 2. Which one of the following would not appear on a single-step income statement? Dross profit benses o sales revenues (d) cost of goods sold 3. The credit terms offered by a company are 2/10, n/30, which means that (a) the customer must pay the bill within 10 days. the customer can deduct a 2% discount if the...
5) Acustomer uses their better life Gym credit card to charge a treadmilla Better Life Gym...
5) Acustomer uses their better life Gym credit card to charge a treadmilla Better Life Gym The is $ 1.000 and the interest charge is 18% per annum If the bill not paid in 30 days. The custo to pay the bill within 30 days and interest e d to the customers account. What is the moon interest a) S 30 b) S 15 c) $180 d) $6 6) in a perpetual inventory system using the carnings approach, cost of...
21. Cosmos Company on July 15 sells merchandise on account to Cajon Co. for $6,000, terms...
21. Cosmos Company on July 15 sells merchandise on account to Cajon Co. for $6,000, terms 2/10, n/30. On July 20 Cajon Co. returns merchandise worth $1,000 to Cosmos Company. On July 24 payment is received from Cajon Co. for the balance due. What is the amount of cash received? a. $4,800 b. $4,900 c. $5,000 d. $6,000 22.Which of the following would require a compound journal entry? a. To record merchandise returned that was previously purchased on account. b....
EX#2 - Glossary: Define an inventory system in which the company does not maintain detailed records...
EX#2 - Glossary: Define an inventory system in which the company does not maintain detailed records of goods on hand throughout the accounting period and determines cost of goods sold only at the end of the accounting period. A Perpetual inventory system Periodic inventory system Just-in-Time Inventory System 0. Specific Identification Inventory Method TEXA2-Glossary: A perpetual inventory System Als updated each time an Her is purchase and updates cost of goods sold. B. Uses optical scanners and bar codes to...
QUESTIONS Which of the following is CORRECT? Under the perpetual inventory wystem, when a purchaser makes...
QUESTIONS Which of the following is CORRECT? Under the perpetual inventory wystem, when a purchaser makes payment within the discount period, the amount of discount will be credited to the Merchandise Inventory account Purchase discounts are calculated on the amount of the merchandise purchased including freight costs. A purchase discount is the amount offered to the purchaser for delaying the payment to the seller Credit terms of a merchandising company are 1/15, net 40. This means that the buyer can...
At the beginning of 2018, the Redd Company had the following balances in its accounts: Cash...
At the beginning of 2018, the Redd Company had the following balances in its accounts: Cash $ 7,900 Inventory 1,900 Common stock 7,400 Retained earnings 2,400 During 2018, the company experienced the following events: Purchased inventory that cost $5,400 on account from Redd Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $490 were paid in cash. Returned $450 of the inventory that it had purchased because the inventory was damaged in transit. The...
Required information [The following information applies to the questions displayed belowj At the beginning of Year...
Required information [The following information applies to the questions displayed belowj At the beginning of Year 2, the Redd Company had the following balances in its accounts: Cash Inventory Land Common stock Retained earnings $ 6,900 15,000 7,000 15,000 13,900 During Year 2, the company experienced the following events 1. Purchased inventory that cost $5,200 on account from Ross Company under terms 1/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $190 were paid in cash. 2....
Required information {The following information applies to the questions displayed below. At the beginning of Year...
Required information {The following information applies to the questions displayed below. At the beginning of Year 2, the Redd Company had the following balances in its accounts: Cash Inventory Common stock Retained earnings $8,200 2,200 7, 700 2,700 During Year 2, the company experienced the following events: 1. Purchased inventory that cost $5,700 on account from Ross Company under terms 2/10,n/30. The merchandise was delivered FOB shipping point. Freight costs of $520 were paid in cash. 2. Returned $350 of...
8. Which of the following accounts has a normal debit balance? a. Accounts Payable b. Sales...
8. Which of the following accounts has a normal debit balance? a. Accounts Payable b. Sales Returns and Allowances c. Sales d. Interest Revenue 9. Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a a. debit to Sales b. debit to Merchandise Inventory c. credit to Merchandise Inventory d. credit to Sales 10. A retailer purchases merchandise with a catalog list price of $15,000. The retailer receives a 30%...
Required Information Problem 4-26A Comprehensive cycle problem: Perpetual system LO 4-2, 4-3, 4-4,4-5, 4-6, 4-7 [The...
Required Information Problem 4-26A Comprehensive cycle problem: Perpetual system LO 4-2, 4-3, 4-4,4-5, 4-6, 4-7 [The following information applies to the questions displayed below) At the beginning of Year 2, the Redd Company had the following balances in its accounts: Cash Inventory Land Common stock Retained earnings $ 6,900 15,000 7,000 15,000 13,900 During Year 2 the company experienced the following events: 1. Purchased inventory that cost $5,200 on account from Ross Company under terms 1/10,n/30. The merchandise was delivered...
1. The abbreviation "FOB stands for (a) free on board. freight on board. free only (10) buyer. (d) freight charge on buyer. 2. Which one of the following would not appear on a single-step income statement? Dross profit benses o sales revenues (d) cost of goods sold 3. The credit terms offered by a company are 2/10, n/30, which means that (a) the customer must pay the bill within 10 days. the customer can deduct a 2% discount if the...
5) Acustomer uses their better life Gym credit card to charge a treadmilla Better Life Gym The is $ 1.000 and the interest charge is 18% per annum If the bill not paid in 30 days. The custo to pay the bill within 30 days and interest e d to the customers account. What is the moon interest a) S 30 b) S 15 c) $180 d) $6 6) in a perpetual inventory system using the carnings approach, cost of...
21. Cosmos Company on July 15 sells merchandise on account to Cajon Co. for $6,000, terms 2/10, n/30. On July 20 Cajon Co. returns merchandise worth $1,000 to Cosmos Company. On July 24 payment is received from Cajon Co. for the balance due. What is the amount of cash received? a. $4,800 b. $4,900 c. $5,000 d. $6,000 22.Which of the following would require a compound journal entry? a. To record merchandise returned that was previously purchased on account. b....
EX#2 - Glossary: Define an inventory system in which the company does not maintain detailed records of goods on hand throughout the accounting period and determines cost of goods sold only at the end of the accounting period. A Perpetual inventory system Periodic inventory system Just-in-Time Inventory System 0. Specific Identification Inventory Method TEXA2-Glossary: A perpetual inventory System Als updated each time an Her is purchase and updates cost of goods sold. B. Uses optical scanners and bar codes to...
QUESTIONS Which of the following is CORRECT? Under the perpetual inventory wystem, when a purchaser makes payment within the discount period, the amount of discount will be credited to the Merchandise Inventory account Purchase discounts are calculated on the amount of the merchandise purchased including freight costs. A purchase discount is the amount offered to the purchaser for delaying the payment to the seller Credit terms of a merchandising company are 1/15, net 40. This means that the buyer can...
Required information [The following information applies to the questions displayed belowj At the beginning of Year 2, the Redd Company had the following balances in its accounts: Cash Inventory Land Common stock Retained earnings $ 6,900 15,000 7,000 15,000 13,900 During Year 2, the company experienced the following events 1. Purchased inventory that cost $5,200 on account from Ross Company under terms 1/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $190 were paid in cash. 2....
Required information {The following information applies to the questions displayed below. At the beginning of Year 2, the Redd Company had the following balances in its accounts: Cash Inventory Common stock Retained earnings $8,200 2,200 7, 700 2,700 During Year 2, the company experienced the following events: 1. Purchased inventory that cost $5,700 on account from Ross Company under terms 2/10,n/30. The merchandise was delivered FOB shipping point. Freight costs of $520 were paid in cash. 2. Returned $350 of...
8. Which of the following accounts has a normal debit balance? a. Accounts Payable b. Sales Returns and Allowances c. Sales d. Interest Revenue 9. Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a a. debit to Sales b. debit to Merchandise Inventory c. credit to Merchandise Inventory d. credit to Sales 10. A retailer purchases merchandise with a catalog list price of $15,000. The retailer receives a 30%...
Required Information Problem 4-26A Comprehensive cycle problem: Perpetual system LO 4-2, 4-3, 4-4,4-5, 4-6, 4-7 [The following information applies to the questions displayed below) At the beginning of Year 2, the Redd Company had the following balances in its accounts: Cash Inventory Land Common stock Retained earnings $ 6,900 15,000 7,000 15,000 13,900 During Year 2 the company experienced the following events: 1. Purchased inventory that cost $5,200 on account from Ross Company under terms 1/10,n/30. The merchandise was delivered...
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