Merchandising Transactions & Inventory Systems – Quick
Reference for Journal Entries | 2024 Accounting Guide |
Perpetual & Periodic Systems
Identify the statements below which summarize what cash discounts are. (Check all that apply.)
✔✔Sellers can grant a cash discount to encourage buyers to pay earlier.
A seller views a cash discount as a sales discount.
A buyer views a cash discount as a purchase discount.
Cash discounts are described in the credit terms.
A reduced payment applies to the discount period.
Demonstrate how to prepare a multiple-step income statement by ranking the items below in
the order they would appear on a multiple-step income statement of a merchandiser. ✔✔Sales
Cost of goods sold
Gross profit
Operating expenses
Income from operations
Other revenues and expenses
On Dec. 7, Toys R Fun purchased $1,000 of merchandise with terms of 2/10,n/30. If payment is
made on December 16, demonstrate the required journal entry for Toys R Fun to record the
payment under the perpetual inventory system. ✔✔Debit Accounts Payable $1,000; credit
Cash $980; credit Merchandise Inventory $20.
Sally Beauty Warehouse uses the perpetual inventory system to account for its merchandise.
On Nov 2, it sold $700 of merchandise on credit with terms of 2/15,n/30. Demonstrate the
required journal entry to record the receipt of payment from the customer on Nov 13, by
selecting all of the correct actions below. (Check all that apply.) ✔✔Debit Cash 686;Debit Sales
Discounts 14;Credit Accounts Receivable 700
(sales discounts is a contra revenue account so it should be increased with a debit)
X-Mart uses the perpetual inventory system to account for its merchandise. On May 1, it sold
$1,400 of merchandise on credit. The original cost of the merchandise to X-Mart was $500.
Demonstrate the required journal entry to record the sale and the cost of the sale by selecting
all of the correct actions below. (Check all that apply.) ✔✔Debit Cost of Goods Sold $500.
Debit Accounts Receivable $1,400.
Reference for Journal Entries | 2024 Accounting Guide |
Perpetual & Periodic Systems
Identify the statements below which summarize what cash discounts are. (Check all that apply.)
✔✔Sellers can grant a cash discount to encourage buyers to pay earlier.
A seller views a cash discount as a sales discount.
A buyer views a cash discount as a purchase discount.
Cash discounts are described in the credit terms.
A reduced payment applies to the discount period.
Demonstrate how to prepare a multiple-step income statement by ranking the items below in
the order they would appear on a multiple-step income statement of a merchandiser. ✔✔Sales
Cost of goods sold
Gross profit
Operating expenses
Income from operations
Other revenues and expenses
On Dec. 7, Toys R Fun purchased $1,000 of merchandise with terms of 2/10,n/30. If payment is
made on December 16, demonstrate the required journal entry for Toys R Fun to record the
payment under the perpetual inventory system. ✔✔Debit Accounts Payable $1,000; credit
Cash $980; credit Merchandise Inventory $20.
Sally Beauty Warehouse uses the perpetual inventory system to account for its merchandise.
On Nov 2, it sold $700 of merchandise on credit with terms of 2/15,n/30. Demonstrate the
required journal entry to record the receipt of payment from the customer on Nov 13, by
selecting all of the correct actions below. (Check all that apply.) ✔✔Debit Cash 686;Debit Sales
Discounts 14;Credit Accounts Receivable 700
(sales discounts is a contra revenue account so it should be increased with a debit)
X-Mart uses the perpetual inventory system to account for its merchandise. On May 1, it sold
$1,400 of merchandise on credit. The original cost of the merchandise to X-Mart was $500.
Demonstrate the required journal entry to record the sale and the cost of the sale by selecting
all of the correct actions below. (Check all that apply.) ✔✔Debit Cost of Goods Sold $500.
Debit Accounts Receivable $1,400.
