Accounting 201

A company has the following selected account balances: Sales: $250,000 Sales Discounts: 1,500 Sales Returns and Allowances: 2,300 Sales Salaries Expense: 56,000 Store Supplies Expense: 15,000 Advertising Expense: 8,000 Cost of Goods Sold: 125,000 What is the gross profit that would appear on a multiple-step income statement:

$121,200

Charlie's Chocolates' had stock issuances of $56,000 and dividends of $23,000. The company has revenues of $89,000 and expenses of $67,000. Calculate its net income.

$22,000. Net Income = Revenues − Expenses Net Income = $89,000 − $67,000; Net Income = $22,000

On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $19,300; Accounts Receivable, $7200; Supplies, $600; Equipment, $11,950; Accounts Payable, $9250. What is the amount of stockholders' equity as of May 31 of the current year?

$29,800. Assets = Liabilities + Stockholders' Equity

On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements. The following information is available: Beginning inventory, January 1: $4,300 Net sales: $43,000 Net purchases: $44,000 The company's gross margin ratio is 15%. Using the gross profit method, the cost of goods sold would be:

$36,550. Explanation: 85% × $43,000 = $36,550

A company has beginning inventory of 46 units at a cost of $12.50 each on October 1. On October 5, it purchases 29 units at $13.50 per unit. On October 12 it purchases 39 units at $14.50 per unit. On October 15, it sells 87 units. Using the periodic FIFO inventory method, what is the value of the inventory at October 15 after the sale?

$391.50 Explanation: Units available for sale = 46 + 29 + 39 = 114 units Units in inventory = 114 − 87 = 27 units Cost of inventory = 27 * $14.50 each = $391.50

Luring Company had net sales of $600,000, cost of goods sold of $200,000, and net income of $100,000. Its gross margin equals:

$400,000

Cushman Company had $832,000 in sales, sales discounts of $12,480, sales returns and allowances of $18,720, cost of goods sold of $395,200, and $286,210 in operating expenses. Gross profit equals

$405,600 (sales-sales discounts-sales returns and allowances-COGS)

Cushman Company had $844,000 in net sales, $369,250 in gross profit, and $211,000 in operating expenses. Cost of goods sold equals

$474,750 (net sales-gross profit)

Saddleback Company paid off $48,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

Assets, $48,000 decrease; liabilities, $48,000 decrease.

assets

Economic resources (things of value) owned by a firm.

Gross margin ratio

Gross Profit/Sales

equity

In finance, equity is ownership of assets that may have debts or other liabilities attached to them. Equity is measured for accounting purposes by subtracting liabilities from the value of the assets.

Cost of goods sold

Net Sales - Gross Profit

When a classified balance sheet is prepared, merchandise inventory is:

Reported as a current asset.

A single-step income statement:

Reports the same amount of net income as that reported on a multiple-step income statement.

Which of the following totals and subtotals are not found on a multiple-step income statement?

Total current assets

Merchandise inventory end

beginning inventory + purchases - cost of goods sold

Gross Profit

net sales - cost of goods sold

Net Sales

sales - sales returns, allowances, and sales discounts

Credit terms of "2/10, n/60" means:

the company will receive a 2 percent discount if paid within 10 days.

Net income

the difference between total revenue and total expenses when total revenue is greater

liabilities

what a company owes