Chapter 4

Question 1

Merchandise Inventory

Answer 1

consists of products a company acquires to resell to customers

Question 2

Cost of goods sold

Answer 2

cost of merchandise sold to the customers

Question 3

Gross Profit

Answer 3

sales - cost of goods sold

Question 4

Trade Discounts

Answer 4

Negotiating discounts

Question 5

Purchase Discount

Answer 5

A reduction from the invoice price granted to induce early payment

Question 6

ledger report for allowances

Answer 6

debit accounts payable and credit merchandise inventory

Question 7

Shipping point

Answer 7

merchandise is the buyers as soon as it gets into the truck

Question 8

destination

Answer 8

merchandise is sellers until delivered

Question 9

Merchandusung sales 2 steps

Answer 9

1. Debit accounts receivable, Credit sales revenue 2. Debit COGS and credit inventory

Question 10

Sales discount ledger account

Answer 10

debit cash and sales discount, Credit accounts receivable

Question 11

Sales return two steps

Answer 11

1. Debit sales return, Credit accounts receivable 2. debit inventory and credit COGS

Question 12

adjusting for shrinkage

Answer 12

debit COGS, Credit inventory

Question 13

coding for merchandiser

Answer 13

close revenues, expense, contra revenue accounts, income summary, and dividends

Question 14

contra revenue accounts

Answer 14

Sales revenue and sales discount/returns