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Merchandising Transactions

Problem 1
If merchandise purchased on account is returned, the buyer may inform the seller of the details by issuing:
A. A debit memorandum
B. A credit memorandum
C. An invoice
D. A bill

Problem 2
If merchandise is sold on account to a customer for $1,000, terms FOB shipping point, 1/10, n/30, and the seller prepays $50 in transportation costs, the amount of the discount for early payment would be:
A. $0.00
B. $5.00
C. $10.00
D. $10.50

Problem 3
For an enterprise using the periodic inventory system, which of the following is added in computing the cost of merchandise sold?
A. Purchases
B. Purchases discounts
C. Purchases returns and allowances
D. Merchandise inventory at the end of the period

Solution Preview

Answer 1: A
A debit memorandum, issued by the buyer, indicates the amount the buyer proposes to debit to the accounts payable account. A credit memorandum, issued by the seller, indicates the amount the seller ...

Solution Summary

This solution looks at merchandising transactions such as purchase returns, discounts and cost of merchandise sold.