Home
Flashcards
Preview
Accounting exam 2 flashcards
Home
Get App
Take Quiz
Create
Merchandising co. Operating cycle
1. Purchase murchandise
2. Sale of merch on account
3. Collect cash for AR
Retailers
Sell merch directly to the public.
Wholesalers
They buy merch from manufacturers and sell to retailers.
Income statement of a merchandising company
Revenue-COGS-expenses= net income
Gross profit = ?
= sales - COGS
Or Net sales - COGS
COGS is ?
An expense of goods sold to customers.
Gross profit % =
Or
Gross profit % margin=
= gross profit / revenue
= gross profit / net sales
Subsidiary ledgers show ?
Details about individual items in the general ledger.
In a Perpetual inventory system ?
The inventory account is continuously updated to show items on hand.
Journal entry for inventory shrinkage
Dr. COGS. XXX
Cr. Inventory. XXX
This reduces the inventory on record.
2/10, n/30 means ?
2% discount if paid in 10 days, otherwise the full amount is due in 30 days.
Purchases on the gross method are recorded at ?
AP always at 100%
Journal entry within discount, on gross method
Dr. AP
Cr. Cash
Cr. Purchase discount taken
Purchases under the net method are recorded ?
AP is always recorded at Net% of invoice. (the $ paid, discount or not)
Journal entry w/ disscount on Net method
Dr. AP. ($ paid)
Cr. Cash. ($ paid)
Purchase w/out discount under net method
Dr. AP
Dr. Purchase discount lost
Cr. Cash
"Sales returns and allowances" & "sales discounts" are what accounts ?
Contra-revenue accounts
(norm balance-- debit)
Sales need how many entries?
TWO!!, one to record sales and one to record COGS
Dr. AR. XXX
Cr. Sales. XXX
Dr. COGS. XXX
Cr. Inventory. XXX
Sales discount need how many journal entries?
ONE
Dr. Cash. XX
Dr. Sales discount XX
Cr. AR. XX
Sales returns need how many journal entries?
TWO
Dr. Sales return & allow
Cr. AR
Dr. Inventory
Cr. COGS
Transportation cost needs how many journal entries?
ONE
Dr. Delivery expense
Cr. Cash
COGS = ?
(using inventory)
= beginning inventory
+ purchases
- ending inventory
Author
Gibbymn
ID
11982
Card Set
Accounting exam 2 flashcards
Description
Prep for exam 2
Updated
2010-03-25T17:53:41Z
Show Answers
Home
Flashcards
Preview