Accounting test 2 (chapter 6)

Calculate the Inventory Turnover Ratio for ABC Co using the following information. Your answer should be entered as a number to the nearest single decimal such as 5.1. Cost of goods sold for 2022 = $1,200,000 Inventory on 12/31/2021 = $210,000 Inventory on 12/31/2022 = $190,000

6

Calculate the Days to sell using the following information. Your answer should be a entered as a number to the nearest single decimal such as 75.2. Cost of goods sold for 2022 = $1,000,000 Inventory on 12/31/2021 = $210,000 Inventory on 12/31/2022 = $190,000

73

ABC Co sells merchandise to a customer for a sales price of $500 on account. The cost of the goods sold is $200. The journal entry to record the sale on ABC's books should include: A credit to Merchandise Inventory of $200. A debit to Sales Revenue of $500. A credit to Cost of goods sold of $300. A credit to cash of $500.

A credit to Merchandise Inventory of $200.

ABC Co purchases merchandise inventory from XYZ Co for the purpose of resale, on account. The merchandise costs $10,000. The terms of the sale are FOB Destination, 2/10, n30. Shipping costs are $50 and paid in cash to the shipping company. After receiving the merchandise, ABC discovers that $300 of the merchandise is damaged and is returned to the seller. The journal entry should include

A credit to Merchandise Inventory of $300.

ABC Co sells merchandise to a customer for a sales price of $500 on account. The cost of the goods sold is $200. The journal entry to record the sale on ABC's books should include:

A debit to Accounts receivable of $500

Which inventory method calculates cost of goods sold by assuming the oldest inventory is sold first?

FIFO

Which inventory method calculates cost of goods sold by assuming the last inventory purchased is sold first?

LIFO

Which inventory method uses the exact cost of each individual item it sells to calculate cost of good sold?

Specific identification

ABC Company has inventory on its books that cost $100,000. The current market cost for the inventory if purchased today would be $90,000. True or False, ABC Co should leave the Inventory on its books at $100,000 because that is the historical cost.

false

The terms of a purchase of merchandise inventory are FOB Shipping Point, payable 2/10, N30. True or False, if the buyer pays the amount owed within 2 days they will receive a 10% discount.

false

The terms of a purchase of merchandise inventory are FOB Shipping Point, payable 2/10, N30. True or False, the seller pays the freight.

false

Gross profit margin percentage is Gross Profit/Sales revenue.

true

The terms of a purchase of merchandise inventory are FOB Destination, payable 2/10, N30. True or False, the seller pays the freight.

true

The terms of a purchase of merchandise inventory are FOB Shipping Point, payable 2/10, N30. True or False, if the buyer pays the amount owed within 10 days they will receive a 2% discount. If paid after 10 days the full amount is due in 30 days.

true

True of False. The difference between Sales revenues and Cost of good sold is called Gross Profit.

true