1) On a merchandising balance sheet, merchandise inventory is listed as a(n) A) current liability. B)…

1) On a merchandising balance sheet, merchandise inventory is listed as a(n) A) current liability. B) expense. C) revenue. D) current asset. 2) A company that uses the perpetual inventory system purchases inventory for $65,000 on account, with terms of 2/1o, n/30. Which of the following is the journal entry to record the payment made within 1 A) a debit to Accounts Payable for $63,700, a debit to Merchandise Inventory for $1,300 and a credit to Cash fors65,000 B) a debit to Merchandise Inventory for $1,300, a debit to Accounts Payable for $65,000 and a credit to Cash for $66,300 C) a debit to Accounts payable for $65,000, a credit to Merchandise Inventory for $1,300, and a credit to Cash for $63,700 D) a debit to Accounts payable for $65,000, a credit to Cash for $65,000 and a debit to Merchandise Inventory for $1,300 Which A) Salaries Expense of the following line items will appear on the income statement of a merchandiser but not of a service company? B) Cost of Goods Sold C) Depreciation Expense D) Supplies Inventory 4) A company using the perpetual inventory system purchased inventory worth $25,000 on account with terms of 2/10, n/30. Defective inventory of $2,000 was returned two days later and the accounts were appropriately invoice is paid within 10 days, the amount of the purchase discount that would be available to the company is A) $500. B) $540 C) $490 D) $460 5) The Sales Discounts Forfeited account A) is a contra Sales Revenue account B) represents additional sales revenue C) is a balance sheet account D) represents the discount lost when a customer does not pay within the discount period 6) A merchandiser uses a perpetual inventory system. The third step in the process of closing the accounts of a merchandiser is to A) make the revenue accounts equal to zero using the Income Summary account B) make the Income Summary account equal to zero using the Owners’ Name, Capital account. C) make the Income Summary account equal to zero using the Owner’s Name, Withdrawals account. D) make the expense accounts equal to zero using the Income Summary account. Use the followin g trial balance to answer question 7: Debit $4,000 14,000 16,000 Credit Accounts Receivable Merchandise Inventory Supplies Land Accounts Payable Notes Payable Song, Capital Song. Withdrawals Sales Revenue Cost of Goods Sold Salaries Expense Utilities Expense Rent Expense Interest Expense Totals 25,000 71,000 2,000 80,000 24,000 169,000 18,000 $271,000 7) The gross profit for this company is A) $169,000 D) $89,000 C) $282,000 B) $180,000 8) Operating income is calculated as the difference between gross profit and A) cost of merchandise inventory C) selling and administrative expenses B) sales revenue. D) cost of goods sold. Michelin Jewelers uses the perpetual inventory system. On April 2, Michelin sold merchandise with a cost of $5,500 $9,000 to a customer on account with terms of 3/15, n/30. The journal entry to record the cost of goods sold would be of Goods Sold Accounts Receivable B) 5,500 ost of Goods Sold eade Ieony c) ferchandise Inventory 5,500 Cost of Goods Sold les Revenue Cost of Goods Sold