CHAPTER SIX REVIEW QUESTIONS: Marvin Corp uses its periodic inventory system and
ID: 2463248 • Letter: C
Question
CHAPTER SIX REVIEW QUESTIONS:
Marvin Corp uses its periodic inventory system and the following information is available:
Sales $27,000
Inventory- Beginning 4,000
Inventory- Ending 3,000
Purchases 16,000
1. Calculate the cost of goods sold:
A) $10,000.
B) $ 9,000.
C) $17,000.
D) $18,000.
2. Calculate the gross profit.
A) $10,000
B) $ 9,000
C) $17,000
D) $18,000
3. Effects of transactions upon the accounting equation
Listed below are selected transactions of Ruffles, a retail store which uses a perpetual inventory system:
a) Purchased merchandise on account.
b) Made an entry to recognize the revenue from a sale of merchandise on account. (Ignore the cost of goods sold.)
c) Recognized the cost of goods sold relating to the sale in Transaction b.
d) Collected in cash the account receivable from the customer in Transaction b.
e) Following the taking of a physical inventory at year-end, made an adjusting entry to record a normal amount of inventory shrinkage.
Indicate the effects of each of these transactions upon the elements of the company's financial statements. Organize your answer in tabular form, using the column headings shown below. (Notice that the cost of goods sold is shown separately from all other expenses.) Use the code letters I for increase, D for decrease, and NE for no effect. The answer for transaction a is provided as an example.
Income Statement Balance Sheet
Transaction Net Sales - COGS - All other exp’s = Net Income Assets = Liabilities + O.E.
(a) NE NE NE NE I I NE
(b)
(c )
(d)
(e)
4. Perpetual inventory system: basic entries
Magnum Company uses a perpetual inventory system. A partial chart of accounts is shown below, followed by a series of merchandising transactions. Indicate the accounts that should be debited and credited in recording each transaction. (Ignore sales taxes.)
1 Cash 50 Sales
2 A/R 60 Cost of Goods Sold
5 Inventory XX All other Expense accounts
30 Accounts payable
Transactions Account Account
Debited Credited
Example – Sold merchandise for cash 1, 60 50, 5
(a)Purchased merchandise on account
(b)Sold merchandise on account
(c)Paid the supplier of the merchandise in transaction (a)
(d)Collected cash from the customer in transaction (b)
(e)The physical inventory taken at year-end disclosed a
Normal amount of inventory shrinkage
5. Periodic inventory system
Parker Fish & Tackle Shop uses a periodic inventory system. At the end of 2001, the accounting records include the following information:
Inventory, December 31, 2000 $7,400
Inventory, December 31, 2001 4,100
Net Sales 200,000
Purchases 88,700
Compute the following for 2000:
a) Cost of goods sold. $________________
b) Gross profit. $________________
6. Net sales and gross profit
Office Supply Corp. had gross sales revenue of $2,800,000, cost of goods sold of $1,300,000, sales returns and allowances of $45,000, and allowed sales discounts of $18,000.
Compute for the year:
(a) Net sales. $________________
(b) Gross profit. $________________
(c)Gross profit rate._________%
Explanation / Answer
Answer
Note : Question 3 & 4 is not properly posted. I Can’t Understand properly.
Marvin Corp uses its periodic inventory system and the following information is available:
Sales $27,000
Inventory- Beginning 4,000
Inventory- Ending 3,000
Purchases 16,000
Answer 1
Calculate the cost of goods sold:
Cost of goods sold = Opening Inventory + Purchases – Closing inventory
= $ 4000 + $ 16000 - $ 3000
= $ 17000
Answer : C) $17,000.
Answer 2.
Calculate the gross profit.
Gross profit = Sales – Cost of Goods Sold
= $ 27000 - $ 17000
= $ 10000
Answer : A) $10,000
Answer 5.
Periodic inventory system
Parker Fish & Tackle Shop uses a periodic inventory system. At the end of 2001, the accounting records include the following information:
Inventory, December 31, 2000 $7,400
Inventory, December 31, 2001 4,100
Net Sales 200,000
Purchases 88,700
Compute the following for 2000:
Answer : a) Cost of goods sold.
Cost of goods sold = Opening inventory + Purchases – Closing inventory
= $ 7400 + $ 88700 - $ 4100
Cost of goods sold = $ 92000
Answer : b) Gross profit
Gross profit = Sales – Cost of Goods sold
= $ 200,000 - $ 92000
Gross profit = $ 108000
Answer 6.
Net sales and gross profit
Office Supply Corp. had gross sales revenue of $2,800,000, cost of goods sold of $1,300,000, sales returns and allowances of $45,000, and allowed sales discounts of $18,000.
Compute for the year:
Answer (a) Net sales
Net sales = Gross Sales Revenue – Sales returns & allowances - allowed sales discounts
= $ 2800000 - $ 45000 - $ 18000
Net sales = $ 2737000
Answer (b) Gross profit
Gross profit = Net Sales – Cost of Goods sold
= $ 2737000 - $1,300,000
Gross profit = $ 1437000
Answer (c) Gross profit rate
Gross profit rate = (Gross profit / net sales) * 100
=($ 1437000 / $ 2737000) *100
Gross profit rate = 52.50%