Testbank to accompany
Accounting 8th Edition by John Hoggett, Lew Edwards, John Medlin, Matthew Tilling Tilling & Evelyn Hogg
Prepared by
Barbara Burns
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Testbank to accompany Accounting 8e
Chapter 6: Accounting for retailing Multiple Choice
% The average average length length o' time it ta(es ta(es 'or a retail retail business business to ac)uire ac)uire inventory inventory,, sell it to its customers and collect the cash owing is called the* a +nventory turnover b perating perating cycle cycle c -ost o' sales d .ross pro'it "/!E0 B !ection 1%
# The main main di''erence di''erence between between a service service and a retail retail business business is is that service service businesses* businesses* a !ell !ell direc directl tly y to to cons consum umer erss b Buy and sell in bul( c -onvert -onvert raw materia materials ls into into 'inished 'inished goods goods d !ell !ell serv service icess rathe ratherr than than good goodss "/!E0 2 !ection 1%
3 hich hich stateme statement nt relating relating to inve inventor ntory y is not correct correct44 a +t is clas classi si'i 'ied ed as a non5 non5cu curr rren entt ass asset et in the the bal balan ance ce shee sheett b +t ma(es ma(es up a signi'icant signi'icant portion o' a retaile retailer6s r6s assets assets c +t is is a very very act activ ivee asse asset, t, cont contin inua uall lly y bein being g ac)u ac)uir ired ed,, sold sold and and rep repla lace ced d d "not nother her name name 'or 'or inve invent ntor ory y is stoc stoc(5 (5in in5t 5tra rade de "/!E0 " !ection 1%
7 hat is the the correct correct layout layout 'or 'or a retailer6s retailer6s income income statement4 statement4 a !ales re revenu venuee 5 cos costt o' o' sal sales es 8 gr gross pr pro'it, it, b !ales revenue 5 e9penses e9penses 8 pro'it c !ale !aless rev reven enue ue 5 cos costt o' o' sal sales es 8 gro gross ss pro' pro'it it 5 e9p e9pen ense sess 8 pro' pro'it it d !ales ales reve revenu nuee 5 cos costt o' o' sal sales es : e9p e9peenses nses 8 gr gross oss pro pro'i 'itt "/!E0 !ection 1#
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Chapter 6: Accounting for retailing
; hich hich o' the the 'ollow 'ollowing ing need need not appea appearr on a ta9 invo invoice4 ice4 a The words
1 =nder .!T .!T >.oods >.oods and !ervices !ervices Ta9? Ta9? legislation legislation in "ustralia "ustralia a ta9 invoice must must be issued 'or all sales in e9cess o'* a @A; b @#$ c @%$ d @%$$ "/!E0 " !ection 13
A !ales !ales 0eturns 0eturns and and "llow "llowance ancess is what type type o' account account44 a -ontra to sales revenue b Liability Liability c -ontra to an asset d E9pense "/!E0 " !ection 17
The prima primary ry purpose purpose o' o' >cash? >cash? settle settlemen mentt discounts discounts is to* to* a -onvi onvinc ncee the the cust custom omeer to to buy buy the good goodss on cre credit dit b Cacilitate Cacilitate the the )uoting )uoting o' prices to di''erent di''erent customer customer groups c 0educe th the in invoice pr price o' o' th the go goods d Encou ncoura rage ge the cust custom omer er to set settl tlee th their eir acc accou ount nt earl early y "/!E0 2 !ection 17 D B sold goods goods to " 'or @# $$$ $$$ " paid his account one month month later later hat hat is the correct correct entry in B6s boo(s to record the payment p ayment by "4 +gnore .!T a 2ebit 2ebit ban( ban( @# $$$ $$$ credit credit sales sales @# @# $$$ $$$ b 2ebit accounts receivable receivab le @# $$$ credit e)uity e) uity @# $$$ c 2ebit 2ebit ban( ban( @# $$$ $$$ credit credit accounts accounts recei receivabl vablee @# $$$ d 2ebit 2ebit account accountss receivab receivable le @# $$$ $$$ credit credit sales sales @#$$$ @#$$$ "/!E0 13
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Testbank to accompany Accounting 8e
!ection 17 %$ !imon sold goods to Lauren Lauren 'or @3,3$$ including .!T .!T Lauren paid her account within the discount period and received a settlement discount o' #F =sing the gross method the entry in !imon6s boo(s to record the payment 'rom Lauren is* a 2ebi 2ebitt ban( ban( @3, @3,#3 #37, 7, deb debit it dis disco coun untt allo allowe wed d @1$, @1$, deb debit it .!T .!T coll collec ecti tion onss @1 @1 credit accounts receivable @3,3$$ b 2ebit ban( @3,#37, debit discount d iscount allowed @11 credit credi t accounts receivable receivabl e @3,3$$ c 2ebi 2ebitt ban( ban( @3, @3,#7 #7$, $, deb debit it dis disco coun untt allo allowe wed d @1$ @1$ cre credi ditt acco accoun unts ts rec recei eiva vabl blee @3,3$$ d 2ebi 2ebitt ban( ban( @3,#37 @3,#37,, debit debit discou discount nt allo allowe wed d @11, @11, debit debit .!T .!T colle collecti ctions ons @1 credit accounts receivable @3,3$1 "/!E0 " !ection 17
%% The speci'ic speci'ic term used by a retailer 'or income income is* a +nte +ntere rest st rec recei eive ved d b !ervice income c !ales d Cees "/!E0 !ection 17
%# .!T is credited credited to the .!T collections collections account when a sale occurs +' goods are returned or a discount allowed the GGGGGGGGGGGGGGG account must be debited with an adustment 'or .!T a .!T coll collec ecti tion onss b .!T outlays c Iurchases d 2isc 2iscou ount nt rece receiv ived ed "/!E0 " !ection 17
%3 hich o' these is not an advantage o' the perpetual perpetual inventory system4 system4 a "llows stoc( losses to be identi'ied b Irovides Irovides reordering reordering in'ormat in'ormation ion c "llow llowss cost cost o' sale saless to be calcu alcula late ted d at at any any tim time d " stoc(5ta 5ta(e nev never has has to be be carried ou out "/!E0 2 !ection 1;
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Chapter 6: Accounting for retailing
%7 =nder the perpetual perpetual inventory system what is the correct entry to record the cost o' the sale o' # electric guitars sold to a customer at @;;$ per guitar including .!T4 The guitars were originally purchased on credit at @#;$ each plus .!T o' @#; per guitar a 2ebit 2ebit cost cost o' sales sales @% %$$ credit credit sale saless @% %$$ %$$ b 2ebit cost o' sales @;$$ @;$$ credit inventory @;$$ @;$ $ c 2ebit 2ebit cost cost o' sales sales @% @% $$$ credit credit inven inventory tory @% @% $$$ d 2ebit cost o' sales sales @;$$, @;$$, debit debit .!T outlays @;$ @;$ credit credit inventory inventory @;;$ "/!E0 B !ection 1;
%; =nder the periodic inventory inventory system a income statement statement cannot be prepared without aan GGGGGGGGGGGG +t is only a'ter aan GGGGGGGGGGG that the cost o' sales can be estimated a Erro rror chec( b Kirus scan c !toc(ta(e d "udit "/!E0 !ection 1;
%1 +n "ustralia "ustralia,, where most accounting is computerised, computerised, the use o' the periodic inventory system is declining hich o' the 'ollowing businesses is still most li(ely to use the periodic approach to accounting 'or inventory4 a -hemist sh shop b !upermar(et c Crui Cruitt and and vege vegeta tabl blee shop shop d !erv !ervic icee stat statio ion n "/!E0 !ection 1;
%A =nder the perpetual perpetual inventory system inventory inventory purchased is debited to which account4 a Irep Irepai aid d e9p e9pen ense sess b -urrent assets c Iurchases d +nventory "/!E0 2 !ection 1;
1;
© John iley and !ons "ustralia, Ltd #$%#
Testbank to accompany Accounting 8e
% =nder the periodic inventory inventory system inventory inventory purchased is debited to which account4 a Irep Irepai aid d e9p e9pen ense sess b !elling e9penses c Iurchases d +nventory "/!E0 !ection 1;
%D =nder the perpetual perpetual inventory system the entry 'or the credit purchase o' %$ electric guitars at @#;$ per guitar plus .!T o' @#; each +s* a 2ebi 2ebitt inve invento ntory ry @#,A;$ @#,A;$ cre credit dit accoun accounts ts payab payable le @#,;$$ @#,;$$,, credit credit .!T .!T outlay outlayss @#;$ b 2ebit inventory @#,;$$, debit deb it .!T outlays @#;$ credit accounts payable @#,A;$ c 2ebit ebit inve invent ntor ory y @#,A @#,A;$ ;$ cred credit it acco accoun unts ts pay payab able le @#, @#,A; A;$ $ d -red -redit it acc accou ount ntss paya payabl blee @#,A @#,A;$ ;$ debi debitt inve invent ntor ory y @#,; @#,;$$ $$,, cred credit it .!T .!T collections @#;$ "/!E0 B !ection 1;
#$ The entry to record the return return o' goods to a supplier supplier under the perpetual inventory inventory system, including .!T, .!T, is* a 2ebi 2ebitt +nv +nven ento tory ry,, cre credi ditt Iur Iurch chas ases es 0etu 0eturn rns, s, cred credit it .!T .!T out outla lays ys b 2ebit "ccounts "ccounts Iayable, Iayable, credit credit Iurchase Iurchases, s, credit credit .!T .!T outlays outlays c 2ebi 2ebitt +nv +nven ento tory ry,, deb debit it .!T .!T out outla lays ys,, ccre redi ditt "cco "ccoun unts ts Iaya Iayabl blee d 2ebi 2ebitt "cco "ccoun unts ts Iay Iayab able le,, ccre redi ditt +nve +nvent ntor ory y, cred credit it .!T .!T outl outlay ayss "/!E0 2 !ection 1;
#% =nder the perpetual perpetual inventory system system the entry to record the cost price o' goods sold on credit is* a 2ebit +nv +nventor ntory y, credi reditt -ost o' sales b 2ebit -ost o' o' sales, sales, credit credit +nventory +nventory,, credit credit .!T utlays utlays c 2ebit -o -ost o' o' sa sales, cr credit +n +nventory d 2ebit -ost o' sale sales, s, cre credit Iurchase hasess "/!E0 !ection 1;
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Chapter 6: Accounting for retailing
## , sold goods goods to on credit credit at a price price o' @7,7$$ including .!T .!T The entry to record this transaction in 6s boo(s under either the perpetual or periodic inventory system is >ignore the trans'er to -! re)uired under the perpetual system?* a 2ebit ebit acco accoun unts ts rece receiv ivab able le @7,7 @7,7$$ $$,, cre credi ditt sal sales es @7, @7,7$$ 7$$ b 2ebit accounts receivable receivabl e @7,$$$, credit sales @7,$$$ @7 ,$$$ c 2ebi 2ebitt acc accoun ounts ts recei receivab vable le @7,$$$ @7,$$$,, debi debitt .!T .!T colle collecti ctions ons @7$ @7$$ $ credi creditt sal sales es @7,7$$ d 2ebi 2ebitt acc accoun ounts ts recei receivab vable le @7,7$$ @7,7$$ cred credit it sale saless @7,$ @7,$$$, $$, credit credit .!T .!T colle collecti ctions ons @7$$ "/!E0 2 !ection 1;
#3 hich o' the 'ollowing 'ollowing is not true o' the periodic inventory system4 system4 a -ost -ost o' sale saless can can be calc calcul ulat ated ed only only a'te a'terr a phys physic ical al stoc stoc(t (ta( a(ee b +t uses uses a Iurchases Iurchases account c +t is is the the sys systtem empl employ oyed ed by by m mos ostt busi busine ness sses es in "ust "ustra rali liaa d +t is the simplest system "/!E0 !ection 1;
#7 =nder the periodic inventory inventory system the entry 'or the credit purchase o' %$ electric guitars at @#;$ per guitar, plus .!T o' %$F is* a 2ebi 2ebitt purc purchas hases es @#,A;$ @#,A;$ cre credit dit accoun accounts ts payabl payablee @#, @#,;$$ ;$$,, credi creditt .!T .!T outlay outlayss @#;$ b 2ebit purchases @#,;$$, debit deb it .!T outlays @#;$ credit accounts payable @#,A;$ c 2ebit ebit purc purcha hase sess @#,A @#,A;$ ;$ cred credit it acco accoun unts ts pay payab able le @#, @#,A; A;$ $ d 2ebi 2ebitt acc accoun ounts ts payabl payablee @#, @#,A;$ A;$ cred credit it purch purchase asess @#, @#,;$$ ;$$,, credi creditt .!T .!T outlay outlayss @#;$ "/!E0 B !ection 1;
#; -alculate -alculate purchases purchases 'or #$%%* #$%%* +nventory 3%%##$%$ @3# ;$$ +nventory 3%%##$%% 37 $$$ -ost o' o' sales during #$% #$%% % @%# $$$
a b c d
@%#1 ;$$ @%#3 ;$$ ;$$ @%#D ;$$ @%3# ;$$
"/!E0 !ection 1; 1A
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Testbank to accompany Accounting 8e
#1 =nder the perpetual perpetual inventory system an inventory inventory loss can be calculated calculated as the di''erence between* a The ledger ledger balance balance o' the the inventory inventory account account and the total total o' the physical stoc(ta(e b !ales less cost o' sales c +nventor +nventory y at at start start less less inven inventory tory at end d " inventory inventory loss cannot be calculated calculated using the the perpetual perpetual inventory inventory system system "/!E0 " !ection 1;
#A The periodic inventory inventory system is a shortcut system that does not record the GGGGGGGGGGGGGG GGGGGGGGGGGG GG o' each sale a -ost pr price b !elling price c 2ate d 2oll ollar va value lue "/!E0 " !ection 1;
# -ost o' goods goods available available 'or sale is e)ual e)ual to* a /et purchases 5 ending inventory b Beginning Beginning inventory inventory 5 ending inventory inventory c Beginning in inventory N net pu purchases d Begin eginni ning ng inv inven ento tory ry N net net pur purch chas ases es 5 endin nding g inve invent ntor ory y "/!E0 !ection 1A
#D ith ith the periodic inventory system system what does the opening balance in the inventory account represent4 a +nventory on hand at at the end end o' the the previous previous period period as determined determined by a physical physical stoc(ta(e b +nventory on hand at the end o' the current period pe riod as determined by a physical stoc(ta(e c The boo( boo( 'igure 'igure 'or current inventory inventory adusted adusted 'or all purchases purchases and sales sales d +nve +nvent ntor ory y loss loss "/!E0 " !ection 1;
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Chapter 6: Accounting for retailing
3$ +' beginning inventory inventory was @%$ $$$, purchases during the period totalled totalled @#; $$$, 'reight5in was @%,$$$ and ending inventory was @%% $$$, calculate the cost o' sales4 a @#1 $$$ b @#; $$$ c @#7 $$$ d @%; $$$ "/!E0 B !ection 1;
3% "ssuming "ssuming the use o' the perpetual inventory inventory method which which o' these entries would be a closing entry at the end o' the accounting period4 a 2ebit ebit +nve +nvent ntor ory y credi reditt Iro Iro'i 'itt and and Los Losss !um !umma mary ry b 2ebit Iro'it and Loss Loss !ummary !ummary credit +nventory +nventory c 2ebit ebit Iro' Iro'it it and and Los Losss !um !umm mary ary cred credit it Iurc Iurcha hase sess d 2ebit ebit Iro' Iro'it it and and Los Losss !um !umm mary ary cred credit it -ost -ost o' !ale !aless "/!E0 2 !ection 11
3# The entry to close5o'' close5o'' beginning inventory inventory using the periodic inventory system is* a 2r !ales -r +nventory b 2r +nventory +nventory -r Iro'it and Loss !ummary c 2r Iurchases -r +nventory d 2r Iro'it and Loss !ummary -r +nventory "/!E0 2 !ection 11
33 +' closing inventory inventory were understated understated pro'it 'or the current current period would be* a verstated b =nderstated =nderstated c =na''ected d " loss "/!E0 B -ost o' sales would be overstated and pro'it would be understated !ection 11
1D
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Testbank to accompany Accounting 8e
37 The 'ormula 'ormula 'or calculating calculating the gross pro'it ratio is* a .ross .ross pro'it pro'it a'ter a'ter ta9 ta9sa sale less b -ost o' salessales c .ros .rosss pro' pro'it it sal sales es d !ale !ales sgr gros osss pro pro'i 'itt "/!E0 !ection 1D
3; hich statement statement concerning concerning the gross pro'it ratio ratio is not true4 a " decl declin inee in in the the rati ratio o rep repre rese sent ntss an un'a un'avo vour urab able le tren trend d b +t is calculated calculated as gross pro'it pro'it divided divided by by net sales c +t can can be com compare pared d wi with rati ratios os 'or 'or si simila milarr bus busin ines esse sess d " decl declin inee in the the rat ratio io can can be cau cause sed d by decr decrea ease sess in in the the cos costt o' o' sale saless "/!E0 2 !ection 1D
31 +n the the +ncome +ncome !tatement !tatement 'or a retailer retailer it is true that* a The cost cost o' sales sales section section is identical identical no matter matter whether whether the the periodic periodic or perpetual perpetual system o' inventory recording is used b 0ent revenue revenue is added added to sales sales revenue revenue to calculate calculate gross pro'it c =nder the periodic periodic system system 'reight 'reight inwards inwards is is added to the the cost o' purchases purchases d E9penses E9penses are classi'ied classi'ied into into the groupings !elling !elling E9penses E9penses 2istributi 2istribution on E9penses E9penses and "dministrative and Cinance e9penses "/!E0 !ection 1A
3A "ssume "ssume that the net price method o' recording recording purchases is used and the business business uses the perpetual method o' inventory recording 0ecord the purchase o' goods 'or @7,$$$ on credit, on terms o' #%$, n3$ +gnore .!T .!T a 2ebit 2ebit +nvento +nventory ry @7,$$$ @7,$$$ credit credit "ccoun "ccounts ts payable payable @7,$$$ @7,$$$ b 2ebit +nventory +nventory @3,D#$ @3,D#$ 2ebit 2ebit 2iscount 2iscount "llowed "llowed @$* credit "ccounts "ccounts payable payable @7,$$$ c 2ebit 2ebit +nvento +nventory ry @3,D#$ @3,D#$ credit credit "ccoun "ccounts ts payable payable @3,D#$ @3,D#$ d 2ebit Iurchase Iurchasess @7,$$$ @7,$$$ credit credit "ccounts "ccounts payable @3,D#$ @3,D#$ credit credit discount discount allowed allowed @$ "/!E0 !ection 1
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Chapter 6: Accounting for retailing
Fill-in the blanks
%
+ GGG GGGGGG GGGGGG GGGG G cons consist istss o' o' good goodss ac) ac)ui uired red 'or resa resale le in the the nor norma mall cour course se o' business business
"/!E0 +nventory !ection 1%
#
Cor Cor sal sales es over over @;$ @;$ a reta retail il busi busine ness ss mu must st issu issuee a ta9 ta9 GGG GGGGG GGGG GGGG GGG G
"/!E0 invoice !ection 13
3
"B/ stan stands ds 'or 'or "GGGG GGGGGG GGGG GGGG GG BGG BGGGG GGGG GGGG GGGG GG /GG /GGG GGGGG GGGGGG GGG G
"/!E0 "ustralian Business /umber !ection 13 7
-oun -ounti ting ng all all inv inven ento tory ry uni units ts on hand hand is (now (nown n as as a sGGG sGGGGG GGGG GGGG GGG G
"/!E0 stoc(ta(e !ection 1;
;
The GGGG The GGGGGGG GGGGG GGG G acc accoun ountt is is an an e9p e9pens ensee acc accoun ountt use used d in in a peri periodi odicc inve invento ntory ry system to accumulate the cost o' inventory ac)uired 'or resale
"/!E0 purchases !ection 1;
1
The purc The purcha hases ses retu returns rns and allo allowa wanc nces es accou account nt is descr describ ibed ed as a cGG cGGGGG GGGGGG GGGGG GG e9pense account as it is always deducted 'rom purchases in the 'inancial reports
"/!E0 contra !ection 1;
A
E9pense E9pe nsess resu result ltin ing g 'rom 'rom the the mar mar(et (etin ing g and and sale sale o' inven invento tory ry includ including ing,, advertising, salesperson6s salaries, sales commissions and delivery e9penses can be classi'ied classi'ied as !GGGGGGGGGG !GGGGGGGGGG and 2GGGGGGGGGG 2GGGGGGGGGG e9penses in the income statement o' a retailer
"/!E0 !elling, 2istribution !ection 1#
1%%
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Testbank to accompany Accounting 8e
The pGGG The pGGGGGG GGGGG GGGG GG inven inventor tory y syst system em provi provides des a con conti tinuo nuous us and and det detai aile led d recor record d o' o' the goods on hand and the cost o' sales
"/!E0 perpetual !ection 1;
D
The pGGG The pGGGGGG GGGGG GGGGG GGG inve invento ntory ry syst system em is a sho short rtcut cut sys syste tem m tha thatt det deter ermi mines nes cost cost o' sales by ta(ing a physical count o' inventory and assuming any goods not on hand have been sold
"/!E0 periodic !ection 1;
%$ %$
The GGGGG The GGGGGGGG GGGGG GG GGGGG GGGGGGGG GGGGG GG rat ratio io mea measur sures es the the propo proport rtio ion n o' sale saless whic which h represents gross pro'it
"/!E0 gross pro'it !ection 1D
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Chapter 6: Accounting for retailing
Exam Tpe !uestions !"E#T$%& 6'(
Japan utdoor "dventures uses the perpetual inventory system to account 'or its inventory inventory The 'ollowing 'ollowing transactions transactions relate relate to July #$%% #$%% The beginning beginning inventory inventory on % July consisted o' #7$, two person tents which cost @#; each >net o' .!T? #$%% July July
7 %$ %# #$ #
Iurc Iurcha hase sed d 7$ tent tentss 'or 'or @#; @#; each each on cred credit it 'rom 'rom T0 -o, -o, plus plus %$F %$F .!T 0etu 0eturn rned ed 1 ten tents ts 'rom 'rom the the 7 July July purc purcha hase se to T0 -o -o Iaid Iaid T0 -o 'or 'or 37 37 ten tents ts and and was was gran grante ted d a disc discou ount nt o' 3;F 3;F !old !old ;# tent tentss 'or 'or @;$ @;$ eac each h on on cre credi ditt to to Ltd Ltd plus plus %$F %$F .!T .!T th Lt Ltd ret returned # o' th the ten tents sol sold on th the %# and was granted a credit "'ter inspection the tents were placed bac( in stoc( Ltd paid the 'ull amount owing 'or ;$ tents
0EO=+0E2* Irepare general ournal entries to record the above in'ormation 'or July
!"E#T$%& 6')
Iartial Trial Balance -ity 2iscount Traders 'or the year ended 3$ June #$%% 2r @ -r @ -ash at ban( 7,#$$ Ci9ed assets ;$,$$$ +nventory %1,;$$ "ccounts payable 3,1$$ .!T collections #%,$$ !ales revenue %D$,$$$ -ost o' sales %%3,A$$ 2iscount e9pense %,1$$ !elling and distribution E9penses #%,D$$ !ales returns and allowances %,3;$ Cinance e9penses %%,%$$
0EO=+0E2* Irepare the gross pro'it section o' the income statement 'or -ity 2iscount Traders 'or the year ended 3$th June #$%% >Ierpetual inventory?
1%3
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Testbank to accompany Accounting 8e
!"E#T$%& 6'*
Iartial Trial Balance -ity 2iscount Traders 'or the year ended 3$ June #$%% -ash at Ban( Ci9ed assets +nventory % July #$%$ Iurchases "ccounts payable .!T collection !ales revenue Iurchases returns and allowances 2iscount e9pense !elling and distribution E9penses !ales returns and allowances Cinance e9penses
7,#$$ ;$,$$$ %3,$$$ %%,7$$ 3,1$$ #%,$$ %D$,$$$ %,#$$ %,1$$ #%,D$$ %,3;$ %%,%$$
"dustment* +nventory at 3$ June #$%% is @%1,;$$ as per stoc(ta(e 0EO=+0E2* Irepare the gross pro'it section o' the income statement 'or -ity 2iscount Traders 'or the year ended 3$th June #$%%' +Ieriodic inventory?
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Chapter 6: Accounting for retailing
#olutions Exam Tpe !uestions #%,"T$%& !"E#T$%& 6'( A.A& %"T/%%0 A/1E&T"0E# .eneral ournal
#$%% July
7
+nventory .!T outlays T0 -o Iurchase 7$ 9 @#; N %$F .!T
@ % , $$ $ % $$
%,%$$
T0 -o
% 1;
%$ T0 -o
D 3;
%# Ltd
#,1$
+n +nventory .!T outlays Iurchase return 1 9 @#; N %$F .!T
%; $ %;
Ba B a n( 2iscount received .!T outlays Iaid T0 -o 37 9 @#A;$ >3;F discount?
D$ # 3$ 3
!a ! ales .!T collections !old ;# 9 @;$ N %$F .!T
-ost o' sales +n +nventory ;# 9 @#; #$ !ales returns and allowances .!T collections Ltd !ales returns # 9 @;$ N %$F .!T +nventory
#,1$$ #1 $
%,3$$ %,3$$
% $$ %$ %%$
;$
-ost o' sales !ales returns # 9 @#; # B an(
;$
#,A;$
Ltd -ustomer paid account ;$ 9 @;$ N %$F .!T
1%;
@
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#,A;$
Testbank to accompany Accounting 8e
#%,"T$%& !"E#T$%& 6')
>Ierpetual +nventory?
C$T2 /$#C%"&T T0A/E0# +ncome !tatement 'or the year ended 3$ June #$%%
@ %D$,$$$ %,3;$ %,1;$ %%3,A$$ @A7,D;$
!ales revenue Less* !ales returns and allowances Less* -ost o' !ales GROSS PROFIT
#%,"T$%& !"E#T$%& 6'*
>Ieriodic +nventory?
C$T2 /$#C%"&T T0A/E0# +ncome !tatement 'or the year ended 3$ June #$%% @
@
!ales revenue Less* !ales returns and allowances Less* -ost o' !ales !toc( %A%$ Iurchases Less Iurchases returns
@ %D$,$$$ %,3;$ %,1;$
%3,$$$ %%,7$$ %,#$$
Less !toc( at end 3$1%% -ost o' sales GROSS PROFIT
%%A,#$$ %3$,#$$ %1,;$$ %%3,A$$ @A7,D;$
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