Question : 136.A company purchased $10,000 of merchandise June 15 with terms : 1258800

 

 

136.A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it was entitled to. The cash paid on June 24 equals:   

A.$8,924.

 

B.$9,700.

 

C.$10,000.

 

D.$9,800.

 

E.$8,724.

Cash Paid = ($10,000 – $800) * .97 = $8,924

 

 

 

137.A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45, and FOB shipping point. The freight charge was $500. On June 20, it returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:   

A.$9,224.

 

B.$10,200.

 

C.$10,500.

 

D.$10,300.

 

E.$9,424.

Cash Paid = $10,000 – $800 = $9,200 * .97 = $8,924 + $500 = $9,424

 

 

 

138.A company’s current assets are $23,420, its quick assets are $13,890 and its current liabilities are $12,220. Its acid-test ratio equals:   

A.0.88.

 

B.1.91.

 

C.1.14.

 

D..52.

 

E.1.41.

Acid-Test Ratio = Quick Assets/Current LiabilitiesAcid-Test Ratio = $13,890/$12,220 = 1.14

 

 

 

139.Using the following year-end information for Bauman, LLC, calculate the current ratio and acid-test ratio: 

Cash$48,000

Short-term investments12,000

Accounts receivable45,000

Inventory225,000

Prepaid expenses12,500

Accounts payable86,500

Other current payables22,000

  

A.3.01 and 1.21

 

B.3.16 and .97

 

C.3.04 and 1.21

 

D.1.09 and 4.77

 

E.3.16 and 1.21

Current Ratio = Current Assets/Current LiabilitiesCurrent Ratio = $342,500/$108,500 = 3.16Acid-Test Ratio = Quick Assets/Current LiabilitiesAcid-Test Ratio = $105,000/$108,500 = 0.97

 

 

 

140.A company’s net sales are $775,420, its costs of goods sold are $413,890, and its net income is $117,220. Its gross margin ratio equals:    

A.46.6%.

 

B.53.4%.

 

C.28.3%.

 

D.31.5%.

 

E.40.5%.

Gross Margin Ratio = (Net Sales – Cost of Goods Sold)/Net SalesGross Margin Ratio = ($775,420 – $413,890)/$775,420 = 46.6%

 

 

 

141.All of the following statements related to U.S. GAAP and IFRS are true except:   

A.Accounting for basic inventory transactions is the same under the two systems.

 

B.The closing process for merchandisers is the same under both systems.

 

C.U.S. GAAP offers little guidance about the presentation order of expenses.

 

D.Neither system requires separate disclosure of items when their size, nature, or frequency are important.

 

E.Neither system defines operating income.

 

 

 

 

142.A company purchases merchandise with a catalog price of $20,000. The company receives a 35% trade discount from the seller. The seller also offers credit terms of 2/10, n/30. Assuming no returns were made and that payment was made within the discount period, what is the net cost of the merchandise?   

A.$13,720.

 

B.$19,600.

 

C.$6,860.

 

D.$13,000.

 

E.$12,740.

Cost of Merchandise = $20,000 * .65 = $13,000; $13,000 * .98 = $12,740

 

 

 

143.A company has net sales of $825,000 and cost of goods sold of $547,000. Its net income is $98,500. The company’s gross margin and operating expenses, respectively, are:   

A.$209,000 and $191,470

 

B.$278,000 and $179,500

 

C.$278,000 and $98,500

 

D.$179,500 and $98,500

 

E.$645,500 and $179,500

Gross Margin = Net Sales – Cost of Goods Sold; $825,000 – $547,000 = $278,000Operating Expenses = Gross Margin – Net Income; $278,000 – $98,500 = $179,500

 

 

 

144.On March 12, Klein Company, Inc. sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual inventory system. The journal entry or entries that Klein will make on March 12 is:    

A.Sales7,800

Accounts receivable7,800

 

 

B.Sales7,800

Accounts receivable7,800

Cost of goods sold4,500

Merchandise Inventory4,500

 

 

C.Accounts receivable7,800

Sales7,800

 

 

D.Accounts receivable7,800

Sales7,800

Cost of goods sold4,500

Merchandise inventory4,500

 

 

E.Accounts receivable4,500

Sales4,500