Accounting Homework 1-10

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A company had sales of $375,000 and its gross profit was $157,500. Its cost of goods sold equals:
 
     $(217,000).
 
     $375,000.
 
     $157,500.
 
     $217,500.
 
     $532,500.

A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals:
 
     $200.
 
     $1,564.
 
     $1,568.
 
     $1,600.
 
     $1,800.

 An account used in the periodic inventory system that is not used in the perpetual inventory system is
 
     Merchandise Inventory
 
     Sales
 
     Sales Returns and Allowances
 
     Accounts Payable
 
     Purchases

Brig Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. Gross profit equals:
 
     $770,000.
 
     $115,000.
 
     $390,000.
 
     $402,000.
 
     $408,000.

  Cost of goods sold:
 
     Is another term for merchandise sales.
 
     Is the term used for the cost of buying and preparing merchandise for sale.
 
     Is another term for revenue.
 
     Is also called gross margin.
 
     Is a term only used by service firms.

Expenses of promoting sales by displaying and advertising merchandise, making sales, and delivering goods to customers are:
 
     General and administrative expenses.
 
     Cost of goods sold.
 
     Selling expenses.
 
     Purchasing expenses.
 
     Nonoperating activities.

Herald Company had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200. Herald Company's net sales equals:

          •    $5,200.
          •    $129,800.
          •    $133,000.
          •    $135,000.
          •    $140,200.

Merchandise inventory:

          •    Is a long-term asset.
          •    Is a current asset.
          •    Includes supplies.
          •    Is classified with investments on the balance sheet.
          •    Must be sold within one month.

On October 1, Courtland Company sold merchandise in the amount of $5,800 to Carter Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Courtland uses the periodic inventory system. The journal entry or entries that Courtland will make on October 1 is:

          •    Choice A
          •    Choice B
          •    Choice C
          •    Choice D
          •    Choice E

On October 1, Courtland Company sold merchandise in the amount of $5,800 to Carter Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Courtland uses the periodic inventory system. Carter pays the invoice on October 8, and takes the appropriate discount. The journal entry that Courtland makes on October 8 is:
 
          •    Choice A
          •    Choice B
          •    Choice C
          •    Choice D
          •    Choice E



On October 1, Mutch Company sold merchandise in the amount of $5,800 to Carr Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Mutch uses the perpetual inventory system. On October 4, Carr returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Mutch must make on October 4 is:
 
          •    Choice A
         •    Choice B
          •    Choice C
          •    Choice D
          •    Choice E

On October 1, Robinson Company sold merchandise in the amount of $5,800 to Rosser, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robinson uses the perpetual inventory system. The journal entry or entries that Robinson will make on October 1 is:

          •    Choice A
          •    Choice B
          •    Choice C
          •    Choice D

The amount recorded for merchandise inventory includes all of the following except:
          •    Purchase discounts.
          •    Returns and allowances.
          •    Freight costs paid by the buyer.
          •    Freight costs paid by the seller.
          •    Trade discounts.

The credit terms 2/10, n/30 are interpreted as:
          •    2% cash discount if the amount is paid within 10 days, or the balance due in 30 days.
          •    10% cash discount if the amount is paid within 2 days, or the balance due in 30 days.
          •    30% discount if paid within 2 days.
          •    30% discount if paid within 10 days.
          •    2% discount if paid within 30 days.

The current period's ending inventory is:
          •    The next period's beginning inventory.
          •    The current period's cost of goods sold.
          •    The prior period's beginning inventory.
          •    The current period's net purchases.
          •    The current period's beginning inventory.

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    Accounting Homework 1-10
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