Bookkeeping 29. Merchandising businesses

Question 1

1. P 76. MERCHANDISING ACCOUNTS. Retailers (aka Merchandisers) have certain JOURNAL ENTRIES for their operations:

Answer 1

Sales Returns
Purchase Discounts
Inventory

Question 2

2 . GROSS (total) REVENUES less RETURNS equal:

Answer 2

NET SALES (Net Customer Purchases)

Question 3

3. The GROSS PROFIT figure is used to calculate the _______________of the business.

Answer 3

OPERATING MARGIN

Question 4

4. The OPERATING MARGIN is computed by:

Answer 4

DIVIDING the GROSS PROFIT ON SALES by GROSS SALES.

Question 5

5. The result of the OPERATING MARGIN calculation will show:

Answer 5

the PERCENTAGE by which GOODS MUST BE MARKED UP TO COVER THEIR ACTUAL COST.

Question 6

6. How do you arrive at GROSS PROFIT for a merchandising outfit?

Answer 6

STOCK REMAINING ON HAND FOR SALE MUST BE ADDED BACK.