a merchandising company quizlet

• 8 avril 2023
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You may have noticed that sales tax has not been discussed as part of the sales entry. Since a merchandising firm has to purchase goods for resale, they account for this cost as cost of goods soldwhat it cost them to acquire the goods that are then sold to the customer. When the customer keeps the defective merchandise and is given a partial refund, it is considered a sales allowance. -budgeted balance sheet -cash budget -budgeted income statement, The financial budgets include the: (check all that apply) *selling expense budget *budgeted income statement *budgeted balance sheet *cash budget *sales budget, *budgeted income statement *budgeted balance sheet, Identify the benefits of budgeting. Before examining the typical manufacturing firms process to track cost of goods manufactured, you need basic definitions of three terms in the schedule of Costs of Goods Manufactured: direct materials, direct labor, and manufacturing overhead. A service entity provides a service such as accounting or legal services or cable television and internet connections. 01-1 Issued $500,000 of capital stock to owners. Several of these issues were related to accounting and the wealth of decision-making information which accounting systems provide. Therefore, although their cost drivers are sometimes not as complex as those of other types of firms, cost identification and control are every bit as important in the service industry. Purchase discounts provide an incentive for the retailer to pay early on their accounts by offering a reduced rate on the final purchase cost. In 2017, they reported these revenue and expenses: Their income statement is shown in Figure 2.12. Requires more accounts than a service business C. Standardized by the FASB for all merch busi. Their income statement format is a bit more complicated than for a service company and is discussed in greater detail in Describe and Prepare Multi-Step and Simple Income Statements for Merchandising Companies. The ethical dilemma may not arise from the accountants employer, but from the employer of the person outside the organization receiving the discount. An increase to sales revenue on the income statement, Sales discounts forfeited on the income statement, An item of other income and expense on the income statement. Service companies often have simple financial transactions that involve taking customer deposits, billing clients after services have been provided, providing the service, and processing payments. The biggest difference is that a customer returns merchandise in a sales return and keeps the merchandise in a sales allowance. While many companies offer their employees discounts as a benefit, some companies also offer discounts or free products to non-employees who work for governmental organizations. Additionally, advertising is expected to be $600 per month. The difference that results when the amount of actual inventory counted is less than the amount of inventory listed in the accounting records. Notice that the current manufacturing costs, or the additional costs incurred during the month, include direct materials, direct labor, and manufacturing overhead. The companys inventory includes clothing, footwear for hiking and running, camping gear, backpacks, and accessories, by brands such as The North Face, Birkenstock, Wolverine, Yeti, Altra, Mizuno, and Patagonia. Lets assume that a customer purchased 10 emergency kits from a retailer at $100 per kit on credit. This book uses the If the company budgets 40% for income tax expanse, the amount of budgeted income tax expense will be $_____. Controlling costs is an integral function of all managers, but companies often hire personnel to specifically oversee cost control. In the terms of 2/15, net 45 what does the 15 represent? The World Customs Organizations Model Code of Ethics and Conduct states that customs employees are called upon to use their best judgment to avoid situations of real or perceived conflict. The __________ is used if the seller expects the buyer to pay the reduced amount within the discount period. Aloan Co. provides the following sales forecast for the next three months: January February March Sales units 3,100 4,300 5,100 The company wants to end each month with ending finished goods inventory equal to 20% of the next months sales. A typical operating cycle for a merchandising company starts with having cash available, purchasing inventory, selling the merchandise to customers, and finally collecting payment from customers (Figure 6.4). However, when the discount was received by the customer, the retailer received $980, and the remaining $20 is recorded in the sales discount account. We recommend using a Sales revenue is the income generated from the sale of finished goods to consumers rather than from the manufacture of goods or provision of services. Calgary Industries is preparing a budgeted income statement for 2018 and has accumulated the following information.
The firm employs several attorneys, paralegals, and office support staff. Pay for the product, purchase product on account, return product, Purchase product on account, return product, pay for product, Sell product on account, accept returns, receive payment for sales, Accept returns, sell product on account, receive payment for sales. After speaking with the nursery, the customer decides to keep 200 of the plants for a partial refund of $1,000. and you must attribute OpenStax. a. Subtract beginning inventory. Which of the following describe management's use of a master budget: -Analyze differences between actual and budgeted results -Help reveal undesirable outcomes -Plan and control activities. When the discount is missed, the retail received the entire $1,000. A merchandiser will need to purchase merchandise for its business to continue operations and can use several purchase situations to accomplish this. ), *unethical behavior *budgetary slack *unnecessary spending, The process of planning future business actions and expressing them as formal plans is called. The following entry would occur. These payment terms establish the purchase cost, an invoice date, any discounts, shipping charges, and the final payment due date. October, 1957. https://www.theiacp.org/resources/law-enforcement-code-of-ethics, Compare and Contrast Traditional and Activity-Based Costing Systems, Creative Commons Attribution-NonCommercial-ShareAlike License, https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters, https://openstax.org/books/principles-financial-accounting/pages/6-1-compare-and-contrast-merchandising-versus-service-activities-and-transactions, Creative Commons Attribution 4.0 International License. Consider your local grocery store or retail clothing store. Cash disbursements for June for merchandise is $_________. As used in accounting, the term internal control describes the methodology of implementing accounting and operational checkpoints in a system to ensure compliance with sound business and operational practices while permitting the proper recording of accounting information. Her business is well established, and she is now considering taking over additional retail space to expand her business to include gourmet foods and gift baskets. In either case, a manufacturer will issue a debit memo to acknowledge the change in contract terms and the reduction in the amount owed. -Plant asset purchases -Diposal of plant assets. The company expects 80% of the sales to be on account. Margo is the owner of a small retail business that sells gifts and home decorating accessories. A B. The outcome of sales less expenses, which is net income (loss), is calculated from these accounts.

At issue is that the employee of the outside organization is placed in a conflict between their personal interests and the interest of their employer. Some of these costs are tied directly to production, while others are general expenses necessary to operate the business. -attainable goals. Memphis Company anticipates total sales for April, May, and June of $840,000, $940,000, and $990,000 respectively. more popular bc: -technology makes it easier. $139,700. At the end of 2019, Whichard and Klein reported the following revenue and expenses: Their Income Statement for the period is shown in Figure 2.13. True b. The manufacturer incurs additional costs, such as direct labor, to convert the raw materials into furniture. -the opportunity to explain differences between actual and budgeted amounts. -inventory info is more timely. Assuming that the customer had not yet paid the nursery any of the $3,000 accounts receivable and assuming that the nursery determines the condition of the returned plants to be sellable, the retailer would record the following entries. Budgeted production for january = Required sales + Closing inventory - Opening inventory = 3100 units + 620 - 20%*4300 = 2860 units. Similar to credit terms between a retailer and a manufacturer, a customer could see credit terms offered by the retailer in the form of 2/10, n/30. The first entry shows the return and the second entry shows the allowance. A merchandising company would typically prepare which of the following budgets instead of the operating budgets? All purchases are on account and the company pays 25% of purchases in the month of the purchase, 50% in the month after the purchase, and the remaining balance in the second month after the purchase. Based on customer feedback, she is confident that there is a demand for these items, but she is unsure how large that demand really is. The total selling expenses for the quarter will be $, $25,800 25,000 x .10=2500 30,000 x .10=3000 35000 x .10=3500 5000 x 3=15,000 600 x 3. If the baseball league elects to pay with cash, the shoe store would debit Cash as part of the sales entry. They may also incur costs from equipment and materials such computer networks, phone and switchboard equipment, rent, insurance, and law library materials necessary to support the practice, but these costs represent a much smaller percentage of total cost than the administrative and personnel costs. Should employees or companies provide discounts to employees of other organizations? are not subject to the Creative Commons license and may not be reproduced without the prior and express written With two senior partners and a small staff of accountants and payroll specialists, the majority of the costs they incur are related to personnel. The revenue and expenses for a law firm illustrate how the income statement for a service firm differs from that of a merchandising or manufacturing firm. Basically, the person performing the return should not be the person recording the event in the accounting records. A company has the following loan activity-Additional loan from bank: $19,000; Ending cash balance: $5,600. If a customer purchases merchandise and is dissatisfied with their purchase, they may receive a refund or a partial refund, depending on the situation. Then, they add their mark-up (or profit margin) to the toothpaste and offer it for sale to you. The nursery would record the following entry for sales allowance associated with 100 plants.
Lowering overall company expenses, thereby increasing net income. (attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license), Plum Crazys Income Statement. Lets consider the same situation except the retailer did not make the discount window and paid in full on September 30. False 3. The sales entry consists of a debit to either Cash or Accounts Receivable (if paying on credit), and a credit to the revenue account, Sales.

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