Chapter 6

Question 0

How do you calculate net sales?

Answer 0

Sales-SRA-Sales Discounts

Question 1

What is the journal entry to record an inventory shortage?

Answer 1

Inventory Shortage Expense

Merchandise Inventory

Question 2

How do you calculate net purchases?

Answer 2

Purchases-PRA-Purchase Discounts-Freight In

Question 3

how do you calculate the gross profit margin?

Answer 3

Gross Profit/Net Sales=%

Question 4

What is the journal entry to record a purchase return?

Answer 4

Cash
PRA
HST Recoverable

Question 5

What is the journal entry to record a sales return?

Answer 5

SRA
HST Payable
Cash

Question 6

The perpetual system records a second journal entry with COGS and merch inventory when:

Answer 6

Sales transactions are involved (Sales, Sales discounts, SRA)

Question 7

Perpetual system uses which accounts for purchase transactions?

Answer 7

Merchandise Inventory

Question 8

Periodic System uses which account for purchase transactions?

Answer 8

Purchase accounts (Purchases, PRA, Purchase discounts)

Question 9

How do you calculate COGS?

Answer 9

Beginning Inventory+Cost of Goods Purchased-Ending Inventory

Question 10

How do you calculate ending inventory?

Answer 10

COGAS-COGS

Question 11

What is the journal entry to record LCM?

Answer 11

Loss due to decline in NRV of inventory

Merchandise Inventory

Question 12

How do you calculate the retail inventory method?

Answer 12

Step 1: GAS@retail/GAS@cost = %
Step 2: GAS@retail - Sold@retail =
EI@retail
Step 3: EI@retail x % = EI@cost

Question 13

How do you calculate average cost of inventory for the periodic system?

Answer 13

Total cost/total # of units