Question :
101.Emerald Co. uses a perpetual inventory system and records purchases : 1237622
101.Emerald Co. uses a perpetual inventory system and records purchases of merchandise at net cost. The company recently purchased 200 compact discs at an invoice price of $6,000 and terms of 2/10, n/30. Half of these discs had been mislabeled and were returned immediately to the supplier. The journal entry to record payment of this invoice after the discount period has expired will include a:
A.Debit to Inventory for $3,000.
B.Credit to Cash for $3,000.
C.Debit to an expense account for $60.
D.Credit to Cash for $2,940.
(1/2 × $6,000) = $3,000
102.Bartner Furniture, Inc. purchased inventory at $1,200 list price and the terms were 3/10, n/30. Bartner paid the full invoice price on the 10th day, what amount of cash did Bartner pay to settle the account?
A.$1,176.
B.$1,236.
C.$1,164.
D.$1,200.
$1,200 × 97% = $1,164
103.Beacon Food Stores purchased canned goods at an invoice price of $4,000 and terms of 2/10, n/30. Half of the goods had been mislabeled and were returned immediately to the supplier. If Beacon Food pays the remaining amount of the invoice within the discount period, the amount paid should be:
A.$1,920.
B.$1,960.
C.$3,920.
D.$4,000.
.98 (1/2 × $4,000) = $1,960
104.If Bounder Dog Supplies, Inc. purchased inventory at $2,200 list price and the terms were 3/10, n/30, what would be the value associated with the inventory if payment was made within 10 days?
A.$2,268.
B.$2,334.
C.$2,200.
D.$2,134.
$2,200 × 97% = $2,134
105.Pet Foods Plus purchased bagged dog food at an invoice price of $6,000 and terms of 2/10, n/30. Half of the bags had been damaged in shipment and delivery was refused. If Pet Foods Plus pays the remaining amount of the invoice within the discount period, the amount paid should be:
A.$2,940.
B.$3,000.
C.$5,880.
D.$6,000.
.98 (1/2 × $6,000) = $2,940
106.The gross profit margin:
A.Is the dollar amount of gross profit expressed as a percentage of cost of sales.
B.May indicate popular products and successful marketing strategies.
C.Must be computed for the business as a whole rather than for specific sales departments.
D.Is equal to cost of goods sold plus gross operating expenses.
107.At the beginning of 2015, Midway Hardware has an inventory of $400,000. Because sales growth was strong during 2015, the owner wants to increase inventory on hand to $450,000 at December 31, 2015. If net sales for 2015 are expected to be $1,600,000, and the gross profit rate is expected to be 35%, compute the cost of the merchandise the owner should expect to purchase during 2015.
A.$1,490,000.
B.$1,040,000.
C.$1,090,000.
D.$1,600,000.
$1,600,000 × (1 – .35) = $1,040,000 Cost of Goods Sold$1,040,000 + $450,000 EI – $400,000 BI = $1,090,000 Purchases
108.If cost of goods sold is $480,000 and the gross profit rate is 40%, what is the gross profit?
A.$320,000.
B.$288,000.
C.$480,000.
D.$1,200,000.
$480,000/.60 = $800,000 (Sales); $800,000 × .4 = $320,000
109.At the beginning of the year, Saratoga Dress Co. had an inventory of $300,000. During the year, the company purchased merchandise costing $850,000. Net sales for the year totaled $1,200,000, and the gross profit rate was 45%. The cost of goods sold and the ending inventory, respectively, were:
A.$1,150,000 and $660,000.
B.$540,000 and $610,000.
C.$660,000 and $490,000.
D.$1,150,000 and $490,000.
Cost of Goods Sold = (100% – 45%) = 55% × $1,200,000 = $660,000Goods Available = $300,000 + $850,000 = $1,150,000Ending Inventory = $1,150,000 – $660,000 = $490,000
110.At the beginning of 2015, England Dresses has an inventory of $140,000. However, management wants to reduce the amount of inventory on hand to $80,000 at December 31. If net sales for 2015 are forecast at $400,000 and the gross profit rate is expected to be 40%, compute the cost of the merchandise which management should expect to purchase during 2015. (Hint: First compute the expected cost of goods sold.)
A.$240,000.
B.$180,000.
C.$320,000.
D.$220,000.
Cost of goods sold = 60% × $400,000 = $240,000Goods available = $80,000 + $240,000 = $320,000Purchases = $320,000 – $140,000 = $180,000
111.On July 1, the inventory of at Barnett Shoes was $60,000. Because of anticipated back-to-school sales, the owner wants to have an inventory of $105,000 on hand at the beginning of August. Net sales during July are expected to total $70,000, with a gross profit rate of 45%. During July, the company should purchase merchandise costing:
A.$38,500.
B.$143,500.
C.$83,500.
D.$105,000.
Cost of goods sold = 55% × $70,000 = $38,500Goods available = $38,500 + $105,000 = $143,500Purchases = $143,500 – $60,000 = $83,500
112.If costs of goods sold is $560,000 and its gross profit rate is 20%, what is the gross profit?
A.$140,000.
B.$70,000.
C.$120,000.
D.$112,000.
Cost of goods sold = 80%Sales = $560,000/.8 = $700,000Gross Profit = .2 × $700,000 = $140,000
113.At the beginning of 2015, Wilson Stores has an inventory of $300,000. Because sales growth was strong during 2015, the owner wants to increase inventory on hand to $450,000 at December 31, 2015. If net sales for 2015 are expected to be $2,600,000, and the gross profit rate is expected to be 35%, compute the cost of the merchandise the owner should expect to purchase during 2015.
A.$750,000.
B.$1,240,000.
C.$1,690,000.
D.$1,840,000.
$2,600,000 × (1 – .35) = $1,690,000 Cost of Goods Sold$1,690,000 + $450,000 EI – $300,000 BI = $1,840,000 Purchases
114.If cost of goods sold is $360,000 and the gross profit rate is 40%, what is the gross profit?
A.$240,000.
B.$360,000.
C.$600,000.
D.$900,000.
$360,000/.60 = $600,000 (Sales); $600,000 × .4 = $240,000
