QC1 4-1. Describe a merchandiser's cost of goods sold. 4-2. How do we compute gross profit for a merchandising company? 4-3. Explain why use of the perpetual inventory system has dramatically increased. QC2 4-4. How long are the credit and discount periods when credit terms are 2y10, ny60? 4-5. Identify which items are subtracted from the list amount and not recorded when computing purchase price: (a) freight-in; (b) trade discount; (c) purchase discount; (d) purchase return. 4-6. What does FOB mean? What does FOB destination mean? QC3 4-7. Why are sales discounts and sales returns and allowances recorded in contra revenue accounts instead of directly in the Sales account? 4-8. Under what conditions are two entries necessary to record a sales return? 4-9. When merchandise is sold on credit and the seller notifies the buyer of a price allowance, does the seller create and send a credit memorandum or a debit memorandum? QC4 4-10. When a merchandiser uses a perpetual inventory system, why is it sometimes necessary to adjust the Merchandise Inventory balance with an adjusting entry? 4-11. What temporary accounts do you expect to find in a merchandising business but not in a service business? 4-12. Describe the closing entries normally made by a merchandising company. QC 4-13. What account is used (for journalizing entries) in a perpetual inventory system but not in a periodic system? 4-14. Which of the following accounts are temporary accounts under a periodic system? (a) Merchandise Inventory; (b) Purchases; (c) Transportation-In. 4-15. How is cost of goods sold computed under a periodic inventory system? 4-16. Do reported amounts of ending inventory and net income differ if the adjusting entry method of recording the change in inventory is used instead of the closing entry method