SEM A111 BKAL1013 Tutorial 4

Topic 5 Accounting For Merchandising

Businesses
Submission 24 November (Thursday) before 4 pm
date

1. The primary difference between a periodic and perpetual inventory system is that a:

A. periodic system determines the inventory on hand only at the end of the
accounting period
B. periodic system keeps a record showing the inventory on hand at all times
C. periodic system provides an easy means to determine inventory shrinkage
D. periodic system records the cost of the sale on the date the sale is made

2. Under the perpetual inventory system, when merchandise is returned, the buyer would
credit:

A. merchandise inventory
B. purchases returns and allowances
C. accounts payable
D. none of the above

3. Which of the following goods would NOT be included in merchandise inventory for a
purchasing company?

A. Goods in transit shipped FOB shipping point

B. Goods on hand in the showroom
C. Goods in transit shipped FOB destination
D. Goods ordered and received from the supplier

4. The entry to record a RM750 sale with terms of 2/10, n/30 would include a(n):

A. decrease to Accounts Receivable for RM750

B. increase to Sales for RM750.
C. increase to Sales Discounts for RM15.
D. decrease to Sales for RM735.

5. The collection of a RM400 account within the 2 percent discount period would result in
a(n):

A. increase to Accounts Receivable for RM392.

B. decrease to Cash for RM392.
C. increase to Sales Discounts for RM8.
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D. decrease to Accounts Receivable for RM392.

6. Under the perpetual inventory system, the entry to record a purchase return would include
a credit to which account?

A. Merchandise Inventory
B. Purchases Returns and Allowances
C. Accounts Payable
D. Sales

7. Mayu Bhd purchased merchandise worth RM900 on credit, terms n/30 and returned
merchandise worth RM100 on next day. What is the required journal entry to record the
merchandise returns under the perpetual inventory system?

Debit (RM) Credit (RM)

A. Accounts Payable 100

Purchases Returns & Allowances 100

B. Accounts Payable 100

Merchandise Inventory 100

C. Merchandise Inventory 100

Purchases Returns & Allowances 100

D. Purchases Returns & Allowances 100

Merchandise Inventory 100

8. Bella Costume has a beginning merchandise inventory of RM45,000. During the period,
purchases were RM210,000; purchase returns, RM6,000; and freight-in RM15,000. A
physical count of inventory at the end of the period revealed that RM30,000 was still on
hand. The cost of goods sold was:

A. RM234,000
B. RM246,000
C. RM264,000
D. RM276,000
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9. Use this information to answer the following question.

Account Name Debit (RM) Credit (RM)

Sales 293,000
Sales Returns and Allowances 10,000
Purchases 68,000
Purchases Returns and
Allowances 8,000
Freight-In 12,000
Selling Expenses 30,000
General and Administrative
Expenses 110,000

In addition, beginning merchandise inventory was RM22,000 and ending merchandise

inventory was RM14,000.

Net income for the period was:

A. RM173,000.
B. RM93,000
C. RM63,000.
D. RM203,000.

10. On 3 June 2010, Top Bhd sold merchandise worth RM800 on credit, terms 2/10, n/30.
The merchandise sold had cost RM550. The customer paid the amount on 10 June 2010.
What is the required journal entry to record the payment received under the periodic
inventory system?
Debit (RM) Credit (RM)
A. Accounts Receivable 784
Sales Discounts 16
Cash 800

B. Accounts Receivable 800

Sales Discounts 16
Cash 784

C. Cash 784
Sales Discounts 16
Accounts Receivable 800

D. Cash 800
Sales Discounts 16
Accounts Receivable 816