Chapter 10 Merchandising Business – Quest Review

1. Match each definition with a related term chosen from the list of terms. Write the number of the term in the space beside the definition.

Definitions

A. Account debited when a sale is made under the perpetual inventory systemB. Process of counting, itemizing, and recording the value of goods on handC. Beginning inventory plus purchasesD. Sales minus sales returns and allowances and sales discountsE. Negative sales invoiceF. A business that buys goods from manufacturers and sells to other

businesses that sell to the publicG. Defective merchandise returned by a customerH. Excess of net sales over cost of goods sold

List of Terms1. adjusting entry 9. net sales2. cash refund 10. prepaid inventory3. cost of goods available for sale 11. Purchases Returns and Allowances4. Cost of Goods Sold 12. retailer5. credit invoice 13. sales invoice6. gross profit 14. sales return7. manufacturer 15. taking inventory8. Merchandise Inventory 16. wholesaler

2. Determine the missing figure for each situation.

Beginning Inventory Purchases

EndingInventory

Cost ofGoods Sold

A. $22 000 $40 000 $ $50 000B. $ $41 000 $15 000 $43 000C. $30 000 $70 000 $25 000 $D. $27 000 $ $25 000 $38 000

3.A. Using the additional information and the worksheet provided, record the year-end adjustments in the Adjustments column and extend all amounts to the income statement and the balance sheet columns. Balance the worksheet.

Additional Information1. Inventory of supplies at year-end is $625.2. Unexpired insurance at year-end is $475.3. Closing inventory of merchandise is $16 000.

B. Prepare the four closing journal entries of December 31, 20–2. Omit explanations. Leave a blank line between entries.

4. Use data from the accounts of Edgewood Company to prepare a partial income statement for the year ended December 31, 20–. Your figures should start with revenue and end with gross profit.

Sales Returns & Allowances $ 7 200 Ending Inventory $ 50 700Discounts Allowed 18 100 Interest Expense 10 300Selling Expenses 98 800 Purchases Returns & Allowances 8 200Sales 372 400 Beginning Equity 105 300Beginning Inventory 42 400 Ending Equity 124 100Purchases 184 200 Freight-in 10 100Discounts Earned 17 300

5.Journalize the following transactions for a merchandising company. The journal page is on the next page. Omit explanations.

Transactions

Oct. 5 Sales InvoiceSold merchandise on account, $562.22 plus HST of $73.09, total $635.31.

7 Credit Invoice IssuedA credit customer returned defective goods, $459.55 plus HST of $59.74, total $519.29.

11 Purchase InvoicePurchased merchandise on account, $4 102.88 plus HST of $533.37, total $4 636.25.

15 Purchase InvoiceFrom Transport Trucking for charges on incoming merchandise, $155.00 plus HST of $20.15, total $175.15.

19 Credit Invoice ReceivedReceived an allowance for damaged merchandise that was originally purchased on account, $100.69 plus HST of $13.09, total $113.78.