Merchandising Operations | 331 .. if beginning and ending merchandise Inventories were ignored in computing profit, then profit would be overstated by P20,000. b. understated by P55,000. c. understated by P35,000. d. understated by P20,000, which of the following is not considered in computing net cost of purchases? Purchases b. Purchases returns and allowances c. Transportation paid on goods shipped to customers d. Transportation paid on purchased goods 75. The entry to record a sale of P7,500 with terms of 2/10, n/30 would include a a. credit to Accounts Receivable for P7,500. b. credit to Sales for P7,500. c debit to Sales Discounts for P150. d. debit to Sales for P7,350. 26. The collection of a P4,000 account within the 2% discount period would result in a a. credit to Accounts Receivable for P3,920. b. credit to Cash for P3,920. c. debit to Accounts Receivable for P3,920. d. debit to Sales Discounts for P80. 27. The collection of a P5,000 account beyond the 2% discount period would result in a a. credit to Accounts Receivable for P5,000. b. credit to Cash for P5,000. c. debit to Cash for P4,900. d. debit to Sales Discounts for P100. 28. Assuming that net purchases was P900,000 during the year and that ending merchandise inventory was P20,000 less than the beginning merchandise inventory of P250,000, how much was cost of goods sold? a. P1,130,000 b. P670,000 c. P920,000 d. P1, 170,000332 | Basic Financial Accounting and Reporting 2021 Edition by Prof. WIN Ballada 29. Goods totaling P50,000 were purchased February 2 with terms of 2/10, Returns of P10,000 were made on February 10. What discounts. if any, can availed of if the invoice was paid on February 12? a. None b P1.000 C. P300 d. P200 30. The entry to record a payment on a P15,000 account within the 29% discount period would include a a. credit to Accounts Payable for P15,000, b. credit to Purchases Discounts for P300. debit to Accounts Payable for P14,700. d. debit to Cash for P15,000. 31. A P5,000 purchases on account was made. The entry to record the payment on account after the expiration of the 2% discount period would include a a. credit to Accounts Payable for P4,900. b. credit to Cash for P4,900. cl debit to Accounts Payable for P5,600. d. debit to Purchases Discounts for P100. 32. Under a periodic inventory system, the entry to record a purchase of P60,000, with terms of 2/10, n/30 would include a a. credit to Accounts Payable for P60,000. by credit to Purchases for P60,000. c. debit to Accounts Payable for P58,800. d. debit to Purchases Discounts for PI, 200. 33: The amount of cost of goods available for sale during the year depends on the amounts of a. beginning merchandise inventory and cost of goods sold. b. beginning merchandise inventory and net purchases. beginning merchandise inventory, cost of goods sold, and ending merchandise inventory. d. beginning merchandise inventory, net purchases, and ending merchandise inventory.Merchandising Operations | 333 NAME: SECTION: SCORE: PROFESSOR: Multiple Choice A buyer received an invoice for P6,000 dated June 10. If the terms are 2/10, n/30, seller receive? and the buyer paid the invoice within the discount period, what amount will the a. P6,000 b. P5,880 C. P4,800 d. P 120 2 The purchases discount account is a contra account to 3. accounts payable. b. purchases. c. sales. d. sales discount. 3. When a seller of merchandise allowed a customer a reduction from the original price for defective goods, the seller will issue to the customer a 3. credit memorandum. b. debit memorandum. c. official receipt. d. sales invoice. 4. When the seller advances the transportation costs and the terms of sale are FOB shipping point, the seller records the payment of the transportation costs by debiting a. accounts payable. c. sales. b. accounts receivable. d. transportation in. 5. The account that appears in the chart of accounts for a merchandising entity but not for a service entity is a. accounts receivable. c. advertising expense. b. accumulated depreciation. d. sales returns and allowances. 6, Olive Valenzuela Traders purchased merchandise from San Jose Suppliers for P3,600 list price, subject to a trade discount of 25%. The goods were purchased on terms of 2/10, n/30, F.O.B. destination. Valenzuela paid P100 transportation costs. Valenzuela returned P400 (list price) of the merchandise to San Jose and later paid the amount due within the discount period. The amount paid is a. P2,254. c. P2,246. b. P2,252. d. P2,352. 7. Grace Ancheta Company which uses the gross price method of recording purchases, and the periodic inventory system, bought merchandise for P8,000, terms 2/10, n/30. If Ancheta returns P2,000 of the goods to the vendor, the entry to record the return should include a334 \\ Basic Financial Accounting and Reporting 2021 Edition by Prof. WIN Ballada credit to purchases returns and allowances of P1,960. b. debit to accounts payable of P2,000. C debit to discounts lost of P40. d. debit to purchases returns and allowances of P1,960. 8. The Dec. 31, 2020 trial balance for Aileen Maglana Company included the following purchases, P40,000; purchases returns and allowances, P2,000; transportation P3,000; ending inventory was P8,000. What was the cost of goods sold for 20209 a. P39,000 c. P38,000 b. P33,000 d. none of the above 9. In preparing a ten-column worksheet for a merchandising firm that uses the periodic inventory system a. the beginning inventory is extended as a credit in the balance sheet columns. b. the beginning inventory is extended as a credit in the income statement columns. c. the ending inventory is shown as a credit in the income statement columns and as a debit in the balance sheet columns. d. the ending inventory is shown as a debit in the income statement columns and as a credit in the balance sheet columns. 10. The basic differences between the financial statements of a merchandising entity and a service entity include the cost of goods sold section of the income statement and the a. equity section of the balance sheet. b. inclusion of merchandise inventory on the balance sheet as a current asset, ci other income section of the income statement. d. profit figure. 11. The excess of net sales over the cost of goods sold is called a. gross profit. b. merchandising income c. operating profit. d. profit. 12. After all adjusting entries are posted, the balances of all asset, liability, Income, and expense accounts correspond exactly to the amounts in the a. financial statements. b. post-closing trial balance. c. unadjusted trial balance. d. worksheet trial balance.330 | Basic Financial Accounting and Reporting 2021 Edition by Prof. WIN Ballado Use the following information to answer questions 19 to 23 below: Debit Credit Account Name 750,000 Sales 15,000 Sales Returns and Allowances 10,000 Sales Discounts 170,000 Purchases 20,000 Purchases Returns and Allowances 30,000 Transportation In 75,000 Selling Expenses General and Administrative Expenses 275,000 In addition, beginning merchandise inventory was P55,000 and ending merchandise Inventory was P35,000. 19. Net sales for the period were 3. P755,000. b. P725,000. C P735,000 d. P775,000 20. Net purchases for the period were a. P150,000. b. P180,000. c. P210,000. d. P430,000. 21. Cost of goods sold for the period was 3. P235,000. b. P160,000. c. P200,000. d. P170,000. 22. Profit for the period was a. P525,000. b. P450,000. C. P250,000. d. P175,000