1) Describe the 2 formats for the income statement of a merchandising company, and list the respective sub-totals found in each income statement format. You should list at least (5) types of expenses that "roll into" each of the 2 Income Statement formats - Also list which sub-total each of the 5 expenses would flow into.
2) Describe purchase discounts and purchase returns & allowances. Also, how is it determined who should pay for Freight costs and when is title to goods transferred under each shipping terms method
3) Sales on Account - Many sales are made on account (on credit) instead of with cash or a credit card. Assume that your new company purchases products that you intend to resell to customers, and your plan is to sell those products at a sales price of 25% over cost. Make the appropriate journal entries to record the sale (on account - ie., on credit) of four (4) of those products to a customer. (You should select any price you wish to pay to your vendor for the purchase). There will be 2 entries.....Be sure to include both the sale to the customer, as well as the impact of the reduction of inventory thru cost of goods sold.
4) How are the financial statements (Balance Sheet, Income Stmt) affected by using the LIFO, FIFO and Weighted Average methods? You should describe each method individually and describe its impact on either the Income Stmt or the Balance Sheet.