Question : 86.A company’s net sales were $676,600, its cost of goods : 1258795

 

 

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%.

Gross Margin Ratio = (Net Sales – Cost of Goods Sold)/Net SalesGross Margin Ratio = ($676,600 – $236,810)/$676,600 = 65%

 

 

 

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%

Gross Margin Ratio = (Net Sales – Cost of Goods Sold)/Net SalesGross Margin Ratio = ($752,000 – $543,000)/$752,000 = 27.8%

 

 

 

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%.

Gross Margin Ratio = (Net Sales – Cost of Goods Sold)/Net SalesGross Margin Ratio = ($2.8 – $1.6)/$2.8 = 43%

 

 

 

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

Trade discount = $500 * 30% = $150Total purchase price per unit = $500 – $150 + $7 = $357

 

 

 

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

Trade discount = $300 * 40% = $120Total sales price per unit = $300 – $120 = $180Total sales = $180 * 100 units = $18,000

 

 

 

93.The amount recorded for merchandise inventory includes all of the following except:   

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 Payable2,500

Merchandise Inventory50

Cash2,450

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.