1 ) The following are some of the terms discussed in the chapter:

Match each term with the best description below. Each term may be used more than once, or may not be used at all.

(a) An expense account that shows the cost of merchandise sold

(b) A group of accounts that share a common characteristic, such as all inventory accounts

(c) An account, such as Sales Discounts, that is deducted from a revenue account on the income statement

(d) The return of unsatisfactory purchased merchandise

(e) Freight terms where the seller will pay for the cost of shipping the goods

(f) An inventory system where a physical inventory count is required to determine inventory on hand and establish cost of goods sold

(g) A reduction in price given to a customer for unsatisfactory inventory

(h) Sales revenue less cost of goods sold

(i) Revenues, expenses, gains, and losses that are not part of the company's main operations

(j) Freight terms where the buyer will pay for the cost of shipping the goods

(k) An inventory system where the cost of goods sold is calculated and recorded with every sales transaction

(l) An asset that shows the cost of goods purchased for resale

(m) Profit divided by net sales

(n) A price reduction given by a seller for early payment on a credit sale

2) Financial information follows for three different companies:

Determine the missing amounts.

Cullumber Cosmetics Riverbed Grocery Marin Footware

Sales $242,000 (e) $_____________ $284,000

Sales returns and allowances (a)__________ 25,000 20,000

Net sales 228,000 346,000 (i)_____________

Cost of goods sold 107,000 (f) _______________ (j)_____________

Gross profit (b)_____________ 201,000 153,000

Operating expenses 47,000 (g)_______________ 95,000

Profit from operations (c)_____________ (h) ______________ (k)_____________

Other expenses 14,000 10,000 (l)______________

Profit (d)______________ 66,000 44,000

3) Oriole Stores is a new company that started operations on March 1, 2017. The company has decided to use a perpetual inventory system. The following purchase transactions occurred in March:

Mar. 1

Oriole Stores purchases $8,600 of merchandise for resale from Octagon Wholesalers, terms 2/10, n/30, FOB shipping point.

2

The correct company pays $155 for the shipping charges.

3

Oriole returns $1,000 of the merchandise purchased on March 1 because it was the wrong colour. Octagon gives Oriole a $1,000 credit on its account.

21

Oriole Stores purchases an additional $13,500 of merchandise for resale from Octagon Wholesalers terms 2/10, n/30, FOB destination.

22

The correct company pays $155 for freight charges.

23Oriole returns $450 of the merchandise purchased on March 21 because it was damaged. Octagon gives Oriole a $450 credit on its account.

30

Oriole pays Octagon the amount owing for the merchandise purchased on March 1.

31

Oriole pays Octagon the amount owing for the merchandise purchased on March 21.

A) Prepare Oriole Stores' journal entries to record the above transactions.

B) Post the transactions to the merchandise inventory account. Compare the total in this account with the total of the cash paid during March by Oriole for the purchase of inventory. (Note: assume there were no sales of inventory in March.)