exam accounting 4

A company has $550,000 in net sales and $193,000 in gross profit. This means its cost of goods sold equals

550,000-193,000=357,000

perpetual inventory system

A detailed inventory system in which a company maintains the cost of each inventory item, and the records continuously show the inventory that should be on hand.

single-step income statement

Income statement format that groups all revenues together and then lists and deducts all expenses together without calculating any subtotals.

Prepare journal entries to record each of the following transactions. the company records purchases using the gross method and a perpetual inventory system sep 15.)purchased merchandise with an invoice price of 35,000 and credit term 2/5, n/15 29.) paid supplier the amount owed on the September 15 purchase

Sep-15 Merchandise Inventory(d)35000 Accounts Payable(c)35000 Sep-29 Accounts Payable(d)35000 Cash(c)35000

compute the amount to be paid for each of the 4 separate invoices assuming that all invoices are paid with the discount period merchandise(gross) term. a.)5,000. 2/10,n/60 b.)20,000. 1/15,eom merchandise(gross) term c.)75,000. 1/10,n/30 d.)10,0000. 3/15,n/45

a)5000*(1-0.02) 4,900 b)20000*(1-0.01) 19,800 c)75000*(1-0.01) 74,250 d)10000*(1-0.03) 9,700

A company's net sales are $675,000, its cost of goods sold is $459,000, and its net income is $74,250. Its gross margin ratio equals

a; Gross margin ratio = ($675,000 − $459,000)/$675,000 = 32%

A company has cash sales of $75,000, credit sales of $320,000, sales discounts of $6,000, sales returns and allowances of $13,700, inventory returns estimated of $13,700, and sales refund payable of $6,000. Its net sales equal

a; Net sales = $75,000 + $320,000 − $6,000 − $13,700 = $375,300

multiple-step income statement

an income statement that reports multiple levels of income (or profitability)

Prepare journal entries to record each of the following sales transactions of a merchandising company. The company uses a perpetual inventory system and the gross method. Apr. 1 Sold merchandise for $4,800, with credit terms n/30; invoice dated April 1. The cost of the merchandise is $2,880. Apr. 4 The customer in the April 1 sale returned $560 of merchandise for full credit. The merchandise, which had cost $336, is returned to inventory. Apr. 8 Sold merchandise for $1,900, with credit terms of 1/10, n/30; invoice dated April 8. Cost of the merchandise is $1,330. Apr. 11 Received payment for the amount due from the April 1 sale less the return on April 4.

apr 1.) account rec (d)4,800 sales(c)4,800 cost of good sold(d)2,880 merchandise(c)2,880 apr4.)sales return (d)560 acc rev(c)560 merchandise inventory(d)336 cost of good sold(c)336 apr 8.) acc rec(d)1,900 sales(c)1,900 cost of goods sold(d)1,330 merchandise(c)1,330 apr 11.)cash(d)4,240 acc rec(4,800-560)(c)4,240

prepare journal entries to record each of the following transactions.the company records purchases using the gross method and a perpetual inventory system aug 1.)purchased merchandise with an invoice price of 60,000 and credit term 3/10,n/30 aug 11.) paid supplier the amount owed from the aug 1 purchases

aug 1.) merchandise inventory (d)60,000 account payable(c)60,000 aug 11.)account payable(d)60,000 merchandise inventory(c)2400 cash(c)57600 60000 *(100%-4%)

A company's quick assets are $37,500, its current assets are $80,000, and its current liabilities are $50,000. Its acid-test ratio equals

b; Acid-test ratio = $37,500/$50,000 = 0.750

Costs of $5,000 were incurred to acquire goods and make them ready for sale. The goods were shipped to the buyer (FOB shipping point) for a cost of $200. Additional necessary costs of $400 were incurred to acquire the goods. No other incentives or discounts were available. What is the buyer's total cost of merchandise inventory?

cost of purchase:5,000 add FOB charges:200 cost incurred:400 total cost:5,600

time period that can pass before a customer's full payment is

credit period

A company purchased $4,500 of merchandise on May 1 with terms of 2/10, n/30. On May 6, it returned $250 of the $4,500 of merchandise. On May 8, it paid the balance owed for merchandise, taking any discount it was entitled to. The cash paid on May 8 is

d; ($4,500 − $250) × (100% − 2%) = $4,165

time period in which a cash discount is available

discount period

ownership of goods is transferred when delivered to the buyer's place of business

fob destination

difference between net sales and the cost of goods sold

gross profits

Goods a company owns and expects to sell to it's customers

merchandise inventory

Prepare journal entries to record each of the following purchases transactions of a merchandising company. Assume a perpetual inventory system. Nov. 5 Purchased 600 units of product at a cost of $10 per unit. Terms of the sale are 2/10, n/60; the invoice is dated November 5 .Nov. 7 Returned 25 defective units from the November 5 purchase and received full credit. Nov. 15 Paid the amount due from the November 5 purchase, less the return on November 7.

nov 5.)merchandising inventory (d)6,000 accounts payable(c)(600 *10)6,000 nov 7.)accounts payable(d)(25*10)250 merchandising inventory(c)250 nov 15.) accounts payable(d)5,750 cash(c)5,635 merchandise inventory (c)(6000-250)*(0.02)115

Purchaser's description of a cash discount received from a supplier of goods.

purchases discount

Seller's description of a cash discount granted to buyers in return for early payment.

sales discount

Gross Margin Ratio

(Net Sales - Cost of Goods Sold) / Net Sales

periodic inventory system

An inventory system in which a company does not maintain detailed records of goods on hand throughout the period and determines the cost of goods sold only at the end of an accounting period.

Acid Test Ratio

Current Assets - Stock / Current Liabilities

ownership of goods is transferred when the seller delivers goods to the carrier

FOB Shipping point