1) The caption "Net sales" in a multi-step income statement is different if a business uses the periodic instead of the perpetual inventory system.
2) Net purchases caption on the multi-step income statement is calculated by subtracting purchase discounts and purchase returns and allowances from purchases.
3) Inventory and cost of goods sold for a business using the periodic inventory system appear on the:
A) balance sheet and statement of owner's equity, respectively
B) statement of owner's equity and income statement, respectively
C) balance sheet and income statement, respectively
D) income statement and cash flow statement, respectively
Table 5-3
Sales revenue
$750,000
Interest revenue
18,000
Freight in
44,000
Beginning inventory
75,000
Purchases discounts
20,000
Sales returns and allowances
44,000
Operating expenses
99,000
Interest expense
15,000
Ending inventory
72,000
Purchases
415,000
Sales discounts
25,000
William Browning, Withdrawals
61,000
Purchase returns and allowances
36,000
4) Refer to Table 5-3. Operating income is:
A) $161,000
B) $214,000
C) $179,000
D) $176,000
5) Refer to Table 5-3. Net income is:
A) $161,000
B) $214,000
C) $179,000
D) $176,000
Table 5-4
The following data is for the Atlantis Merchandising, which uses a periodic inventory system:
Sales revenue
$600,000
Interest revenue
12,000
Freight in
42,000
Beginning inventory
77,000
Purchase discounts
19,000
Sales returns and allowances
33,000
Operating expenses
77,000
Interest expense
9,000
Ending inventory
81,000
Purchases
415,000
Sales discounts
35,000
Omar Atlantis, Withdrawals
71,000
Purchase returns and allowances
39,000
6) Refer to Table 5-4. The operating income for Atlantis Merchandising is:
A) $(11,000).
B) $63,000.
C) $51,000.
D) $60,000.
7) Refer to Table 5-4. The net income for Atlantis Merchandising is:
A) $(11,000).
B) $63,000.
C) $51,000.
D) $60,000.
Table 5-5
The following items were taken from the December 31, 2013 records of Speedy Boat Company, which uses a periodic inventory system:
Salary payable
$1,100
Sales revenue
480,000
Interest revenue
3,000
Freight in
20,000
Beginning inventory
35,000
Sales discounts
18,000
Purchases of inventory
240,000
Purchase returns and allowances
35,000
Purchase discounts
10,000
Sales returns and allowances
35,000
Ending inventory
80,000
Operating expenses
85,000
Interest expense
7,000
Owner withdrawals
12,000
8) Refer to Table 5-5. The operating income for Speedy Boat Company is:
A) $156,000.
B) $172,000.
C) $168,000.
D) $160,000.
9) Refer to Table 5-5. The net income for Speedy Boat Company is:
A) $156,000.
B) $172,000.
C) $168,000.
D) $160,000.
Match the following.
A) net purchases
10) Purchases minus purchase discounts and minus purchase returns and allowances
