Prepare journal entries to record the following transactions for a retail store. The company uses a perpetual inventory system and the gross method.

Exercise 4-3 Recording purchases, purchases returns, and purchases allowances LO P1

Prepare journal entries to record the following transactions for a retail store. The company uses a perpetual inventory system and the gross method.

 
Apr.           2           Purchased $5,100 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point.
            3           Paid $310 cash for shipping charges on the April 2 purchase.
            4           Returned to Lyon Company unacceptable merchandise that had an invoice price of $750.
            17           Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise.
            18           Purchased $9,500 of merchandise from Frist Corp. with credit terms of 1/10, n/30, invoice dated April 18, and FOB destination.
            21           After negotiations, received from Frist a $500 allowance toward the $9,500 owed on the April 18 purchase.
            28           Sent check to Frist paying for the April 18 purchase, net of the allowance and the discount.

Explanation
Apr.           17:           Cash paid within discount period less returns = [($5,100 − $750) × (100% − 2%)] = $4,263.
Apr.           28:           Cash paid balance within discount period = [($9,500 − $500) × (100% − 1%)] = $8,910.

Thank you!

is an organizational design with low departmentalization, wide spans of control, centralized authority, and little formalization.

__________ is an organizational design with low departmentalization, wide spans of control, centralized authority, and little formalization.

Functional structure

Simple structure

Divisional structure

Organizational structure

________ is an obligation to perform assigned duties.

Line authority

Authority

Responsibility

Staff authority

is the production of items in continuous processes.

Unit production

Centralization

Process production

Mass production

__________ is the obligation or expectation to perform any assigned duties.

ANSWER

correct

Span of control

Responsibility

Authority

Unity of command

__________ entitles a manager to direct the work of an employee.

ANSWER

Responsibility

Line authority

Staff authority

Authority

Authority is __________.

ANSWER

an obligation to perform assigned duties

a type of authority that entitles a manager to direct the work of an employee

the rights inherent in a managerial position to tell people what to do and to expect them to do it

positions with some authority that have been created to support, assist, and advise those holding line authority

__________ is arranging and structuring work to accomplish the organization’s goals.

ANSWER correct

Organizing

Departmentalization

Organization design

Work specialization

At the local ice cream parlor, every employee had his or her own specialty. Ron made all the banana splits, Ross made the ice cream cakes, Maddi made the ice cream cookies, and Reese took care of all the chocolate dips.

Getting work done efficiently and effectively is considered the goal of __________.
A. organizing
B. leading planning
D. controlling
E.Managing
Answer
A.    Organizing
At the local ice cream parlor, every employee had his or her own specialty. Ron made all the banana splits, Ross made the ice cream cakes, Maddi made the ice cream cookies, and Reese took care of all the chocolate dips. This is an example of which of the following?
A.
Product organization
B.
Work division
C.
Departmentalization
D.
Work specialization
E.
Cross-functional work
Answer
D.
Work specialization

The registrar's office has a reputation for requiring lots of documentation, long lines, and rigid departmentalization. This would be an example of which of the following structures?
A.    Bureaucratic
B. Traditional
C. Organic
D. Centralized
E. Formalized

Answer
A.    Bureaucratic

Sam's Pizza is a local restaurant that everyone wants to work at. Sam gives all shift managers the power to make their own rules, meet the customer requests in their own way, and adapt the menu to the changing of seasons. This would be an example of which of the following structures?
A.
Bureaucratic
B.
Organic
C.
Centralized
D.
Formalized
E.
Traditional
Answer
B.    Organic
Which of the following is considered a traditional organizational design?
A.
Divisional
B.
Lean
C.
Flexible
D.
Innovative
E.
Adaptive
Answer
A.    Divisional

Which of the following is considered a contemporary organizational design?
A.
Adaptive
B.
Simple
C.
Divisional
D.
Team
E.
Organic
Answer
D.
Team

As a way to communicate innovations and new ideas with all employees inside McDoogles Game and Play, Jim McDoogle uses a tool called the McDoogle Black Box to facilitate sharing this information. McDoogles is what kind of organization?

A.
Matrix
B.
Technological
C.
Simple
D.
Divisional
E.
Learning

Answer
E.
Learning


Desmond works for a technology firm in Virginia from his home in South Carolina. He is able to stay connected through Skype, Messenger, and the organization's intranet. Desmond's work arrangement is most like which of the following?
A.
Flex location
B.
Job sharing
C.
Technology-driven
D.
Teleporting
E.
Telecommuting
Answer
E.
Telecommuting

In a perpetual inventory system, which account would be debited when goods are purchased with the intent of being resold?

Gross profit will result if


    sales revenue is greater than cost of goods sold.

    operating expenses are less than net income.

    operating expenses are greater than cost of goods sold.

    sales revenue is greater than operating expenses.

Answer
sales revenue is greater than cost of goods sold.


Gross profit is


    sales revenue less cost of goods sold.

    net income less operating expenses.

    net income less cost of goods sold.

    sales revenue less operating expenses. 


Answer
sales revenue less cost of goods sold.


A company determines the cost of goods sold each time a sale occurs in
    a periodic inventory system only.

    a perpetual inventory system only.

    both a periodic and perpetual inventory system.

    neither a periodic nor perpetual inventory system. 

Answer
    a perpetual inventory system only.


Under a perpetual inventory system
    purchases on account are debited to Purchases.

    purchase returns are debited to Purchase Returns and Allowances.

    freight costs are debited to Freight-Out.

    purchases on account are debited to Inventory. 

Answer
purchases on account are debited to Inventory. 

FOB shipping point means that the
    common carrier pays the freight.
    seller pays the freight.

    goods are placed free on board to the buyer’s place of business.

    buyer pays the freight. 

Answer
  buyer pays the freight. 

In a perpetual inventory system, which account would be debited when goods are purchased with the intent of being resold?

    Cost of Goods Sold

    Inventory

    Purchases

    Accounts Payable

Answer
    Inventory

Company A purchases $1,200 of merchandise from Company B on July 1 with credit terms 2/10, n/30. Company A returns $200 of the merchandise on July 5. On July 11, Company B received full payment from Company A. The amount of the payment on July 11 is


    $980.

    $20.

    $1,176.

    $1,000. 

Answer
 $980.
First, payment is made within the 10-day discount period, thus the 2% cash discount is to be applied to the final payment. Cash discount = Gross invoice price ($1,200) – return and allowances ($200) x Cash Discount (2%) = $20. The amount of the payment = Gross invoice price ($1,200) – returns and allowances ($200) – cash discount ($20) = $980.




A credit sale of $750 is made on June 13, terms 2/10, net/30. A return of $50 is granted on June 16. The amount received as payment in full on June 23 is


    $686.

    $685.

    $700.

    $650.  

Answer
 $686.
This amount is accurate because the full amount is paid within 10 days of the purchase {($750 - $50) – [($750 - $50) X 2%]}.      

To record the sale of goods for cash in a perpetual inventory system


    two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and reduction of inventory.

    two journal entries are necessary: one to record the receipt of cash and reduction of inventory, and one to record the cost of goods sold and sales revenue.

    only one journal entry is necessary to record the receipt of cash and the sales revenue.

    only one journal entry is necessary to record cost of goods sold and reduction of inventory. 

Answer 
two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and reduction of inventory.

Which of the following is not part of the journal entries made when merchandise is sold on credit?


    Debit the Accounts Receivable account.

    Credit the Cost of Goods Sold account.

    Credit the Sales Revenue account.

    Credit the Inventory account.
 Answer
Credit the Cost of Goods Sold account.

The Cost of Goods Sold account is debited when inventory is sold on account.