Moraine Park Technical College
Accounting 1 – Problem Solving Exercise 4 – Merchandising Business
1. When the buyer pays transportation costs of delivering merchandise, delivery terms are stated as ________.
A. FOB shipping point
B. FOB destination
2. The primary difference between a periodic and perpetual inventory system is that a periodic system _________.
A. determines the inventory on hand only at the end of the accounting period
B. keeps a record showing the inventory on hand at all times
C. always uses the first-in, first-out method of costing inventory
D. records the cost of the sale on the date the sale is made
3.
A physical inventory count is used to determine ____________.
A. cost of ending inventory B. sales revenue C. cost of goods sold
D. both A and C
4.
Merchandise is ordered on November 12; it is shipped by the seller and the invoice is prepared, dated, and mailed by the
seller on November 15; the merchandise is received by the buyer on November 17; and the entry is made in the buyer's
accounts on November 18. The credit period begins on _______.
A. November 12
B. November 15
C. November 17
D. November 18
5.
A sales invoice included the following: price, $6,000; transportation, $300; terms 2/1 0, FOB shipping point.
assuming credit for a return of $600 is granted prior to payment, the transportation is prepaid by the seller, and the
invoice is paid within the discount period. _________ must be paid to the seller.
A. $5,880 B. $5,592
C. $5,586
D. $5,292
The following information pertains to questions 7-11
The following data was taken from the ledger for the current year:
Sales $900,000
Sales Returns and Allowances $30,000 Purchases $500,000
Purchases Discounts $4,000
Purchase Returns and Allowances $8,000 Transportation In $2,000
Inventory at beginning of year $90,000
Inventory at end of year $130,000
6.
7.
8.
9.
10.
Net Sales
= ____________
Net purchases
= ____________
Cost of merchandise purchased = ____________
Cost of goods available for sale = ____________
Cost of goods sold
= ____________
Use the following for Questions 11-13, a periodic inventory system
A. debit to Purchases B. debit to Inventory C. debit to Cash D. debit to Sales Returns and Allowances
11. When a $5000.000 purchase of merchandise is made for cash, the transaction is recorded with a __________________.
12. When a customer returns $500.00 of merchandise purchased for cash, the seller records the transaction with a _________.
13. A $250.00 sale to a customer who use a bank credit card such as MasterCard or Visa is recorded with a ____________.
Use the following for questions 14-16, a perpetual inventory system
A. debit to Purchases B. debit to Inventory C. credit to Inventory
D. credit to Sales Returns and Allowances
14. The entry to record purchase of merchandise on account includes a _____________.
15. The entry to record sale of merchandise on account includes a ____________.
16. The entry to record return of merchandise sold on account includes a ____________.
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