EXERCISES wer general questions E5-1 Mr. McKenzie has prepared the following list of sta and merchandisers. 1) . Measuring net income for a merchandiser is companies conceptually the same as for a service 2. For a merchandiser, sales less operating expenses is called gross 3. For a merchandiser, the primary source of revenues is the sale of inventory 4. Sales salaries and wages is an example of an operating ex 5. The operating cycle of a merchandiser is the same as that of a service company 6. In a perpetual inventory system, no detailed inventory records of goods on hand are maintained. 7. In a periodic inventory system, the cost of goods sold is determined only at the end of the accounting period. 8. A periodic inventory system provides better control over inventories than a perpetual system. Instructions Identify each statement as true or false. If false, indicate how to correct the statement. alize purchase ctions. E5-2 Information related to Kerber Co. is presented below 1. On April 5, purchased merchandise from Wilkes Company for $23,000, terms 2/10 net/30, FOB shipping point. 2. On April 6, paid freight costs of $900 on merchandise purchased from Wilkes. 3. On April 7, purchased equipment on account for $26,000. 4. On April 8, returned damaged merchandise to Wilkes Company and was granted a $3,000 credit for returned merchandise 5. On April 15, paid the amount due to Wilkes Company in full Instructions (a) Prepare the journal entries to record these transactions on the books of Kerber Co. under a perpetual inventory system. X (b) Assume that Kerber Co. paid the balance due to Wilkes Company on May 4 instead of April 15. Prepare the journal entry to record this payment. ize perpetual y etnes E5-3 On September 1, Nixa Office Supply had an inventory of 30 calculators at a cost of $18 each. The company uses a perpetual inventory system. During September, the follow ing transactions occurred. Sept. Purchased 90 calculators at $22 each from York, terms net/30. 6 9 Paid freight of $90 on calculators purchased from York Co. 10 Returned 3 calculators to York Co. for $69 credit (including freight) because 12 Sold 26 calculators costing $23 (including freight) for $31 each to 14 Granted credit of $31 to Sura Book Store for the return of one calculator that 20 Sold 30 calculators costing $23 for $32 each to Davis Card Shop, terms n/30. they did not meet specifications. Store, terms n/30. was not ordered Sura Book Instructions Journalize the September transactions. ES-4 On June 10, Diaz Company purchased $8,000 of merchandise from Taylor Company FOB shipping point, terms 2/10,n/30. Diaz pays the freight costs of $400 on June 11. Dam- aged goods totaling $300 are returned to Taylor for credit on June 12. The fair value of these goods is $70. On June 19, Diaz pays Taylor Company in full, less the purchase dis- count. Both companies use a perpetual inventory system Instructions (a) Prepare separate entries for each transaction on the books of Diaz Company. chase and sales ES-4 On Ju r Tayler Company. The merchandise