Question : 86. A company’s net sales were $676,600, its cost of goods : 1257874

86. A company’s net sales were $676,600, its cost of goods sold was $236,810 and its net income was $33,750. Its gross margin ratio equals: 
A. 5%.
B. 9.6%.
C. 35%.
D. 65%.
E. 285.7%.

87. A company had net sales of $752,000 and cost of goods sold of $543,000. Its net income was $17,530. The company’s gross margin ratio equals: 
A. 18.9%
B. 24.5%
C. 27.8%
D. 34.7%
E. 35.2%

88. Mega Skateboard Supplier, Inc.had net sales of $2.8 million, its cost of goods sold was $1.6 million, and its net income was $0.9 million. Its gross margin ratio equals: 
A. 32%.
B. 175%.
C. 43%.
D. 57%.
E. 56%.

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

90. A trade discount is: 
A. A term used by a purchaser to describe a cash discount given to customers for prompt payment.
B. A reduction in selling price below the list price.
C. A term used by a seller to describe a cash discount granted to customers for prompt payment.
D. A reduction in price for prompt payment.
E. Also called a rebate.

91. Jasper Company, Inc. is a wholesaler that buys merchandise in large quantities. Its supplier’s catalog indicates a list price of $500 on merchandise Jasper intends to purchase, and offers a 30% trade discount for large quantity purchases. The cost of shipping for the merchandise is $7 per unit. Jasper’s total purchase price per unit will be:

A. $507
B.$350
C. $357
D. $343
E. $493
 

92. Fragment Company, Inc. is a wholesaler that sells merchandise in large quantities. Its catalog indicates a list price of $300 on a particular product and a 40% trade discount is offered for quantity purchases of 50 units or more. The cost of shipping the merchandise is $7 per unit under terms FOB shipping point. If a customer purchases 100 units of this product, what is the amount of sales revenue that Fragment will record from this sale?

A. $18,000
B. $30,000
C. $18,700
D. $29,300
E. $30,700
 

93. The amount recorded for merchandise inventory includes all of the following : 
A. Purchase discounts.
B. Returns and allowances.
C. Freight costs paid by the buyer.
D. Freight costs paid by the seller.
E. Trade discounts.

94. A company uses the perpetual inventory system and recorded the following entry:

Accounts Payable………………………… 2,500

Merchandise Inventory…………….50

Cash…………………………………2,450 

This entry reflects a: 
A. Purchase of merchandise on credit.
B. Return of merchandise.
C. Sale of merchandise on credit.
D. Payment of the account payable less a 2% cash discount taken.
E. Payment of the account payable less a 1% cash discount taken.

95. A debit memorandum is: 
A. Required whenever a journal entry is recorded.
B. The source document for the purchase of merchandise inventory.
C. Required when a purchase discount is granted.
D. The document a buyer issues to inform the seller of a debit made to the seller’s account in the buyer’s records.
E. Not necessary in a perpetual inventory system.