ACCT 2301 CHAPTER 4 MERCHADISING BUSINESS
MULTIPLE CHOICE QUESTIONS
X is the seller and Y is the buyer. X sold $10000 worth merchandise to Y 3|10 net|30
FOB destination. Y paid the trucker $400 for transportation. Y paid the bill within10
days. Answer the following questions 1 through 4:
1) When Y pays the transportation bill in Y”s book:
a)debit purchases and credit cash b)debit accounts payable and credit cash c)debit
transportation-in and credit cash d)debit accounts receivable and credit cash e)none of
the is true
2) What is the journal entry in the books of X if he receives the amount within ten days
from Y?
a) cash debit $10000 and accounts receivable credit $10000 b)cash debit$9700 sales
discount debit $300 and accounts receivable credit $10000 c)cash debit $9700 and
accounts receivable credit $9700 d)none of the above.
3)Y sells all the merchandise he bought from X for $14000 what is the gross margin?
a) $4300 b)$ 4000 c)$ 4700 d) none of the above
4) Y uses perpetual inventory system. When he sells all merchandise bought from X for
$14000 which of the following is true?
a) debit accounts receivable $14000 b)debit cost of goods sold $9700 c)credit inventory
$9700 d) all the above are true e)only c & d are true.
ABC company”s gross sales are $ 120000,sales returns and allowances are
$5000,beginning inventory is $8000,ending inventory is $10000,gross margin is 30% of
net sales. Advertising expense is $3000, transportation-out is $5000. Answer following
three questions:
1) Purchases of ABC company is: a) $115000 b) $113000 c) $ 82500 d) $ 107000
e) none of the above.
2) Net income of ABC company is: a) $36000 b) $ 34500 c) $ 31500 d) $ 26500
e) none of the above
3) What is the net income percentage or return on sales? a) 23.04% b) 22.08%
c) 30% d) none of the above.
XYZ company maintains perpetual inventory system. On 12|31|20x1 the inventory on the
book is $8000 and manual count shows only $6000 inventory on that date. The book
inventory is corrected based on the manual count. What is the effect of this inventory
correction on the financial statements? a) decreases cost of goods sold b) decreases gross
profit c) decreases assets d) a& c are correct e) b & c are correct