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- 1. Multiple Choice
A company has sales of $763,000 and cost of goods sold of $306,000. Its gross profit equals:
$(457,000).
$763,000.
$306,000.
$457,000.
$1,069,000.
- 2. Multiple Choice
A company purchased $3,100 of merchandise on July 5 with terms 3/10, n/30. On July 7, it returned $340 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July 8 equals:
$340.
$2,667.
$2,677.
$2,760.
$3,100.
- 3. Multiple Choice
A company purchased $3,700 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $850 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is:
Debit Merchandise Inventory $2,850; credit Cash $2,850.
Debit Cash $2,850; credit Accounts Payable $2,850.
Debit Accounts Payable $2,850; credit Merchandise Inventory $57; credit Cash $2,793.
Debit Accounts Payable $3,700; credit Cash $3,700.
Debit Accounts Payable $2,850; credit Cash $2,850.
- 4. Multiple Choice
A company purchased $3,300 worth of merchandise. Transportation costs were an additional $290. The company returned $230 worth of merchandise and then paid the invoice within the 3% cash discount period. The total cost of this merchandise is:
$3,240.00.
$3,093.00.
$3,261.00.
$3,267.90.
$3,360.00.
- 5. Multiple Choice
Garza Company had sales of $150,200, sales discounts of $2,250, and sales returns of $3,605. Garza Company's net sales equals:
$5,855.
$144,345.
$147,950.
$150,200.
$156,055.
- 6. Multiple Choice
On February 3, Smart Company sold merchandise in the amount of $4,300 to Truman Company, with credit terms of 3/10, n/30. The cost of the items sold is $2,970. Smart uses the perpetual inventory system and the gross method. Truman pays the invoice on February 8, and takes the appropriate discount. The journal entry that Smart makes on February 8 is:
Cash 2,970
Accounts receivable 2,970
Cash 4,300
Accounts receivable 4,300
Cash 4,220
Sales discounts 89
Credit Accounts receivable 4,309
Cash 2,890
Accounts receivable 2,890
Cash 4,171
Sales discounts 129
Credit Accounts receivable 4,300
- 7. Multiple Choice
On September 12, Vander Company sold merchandise in the amount of $6,600 to Jepson Company, with credit terms of 3/10, n/30. The cost of the items sold is $4,800. Vander uses the periodic inventory system and the gross method of accounting for sales. The journal entry or entries that Vander will make on September 12 is:
Sales 6,600
Accounts receivable 6,600
Sales 6,600
Credit Accounts receivable 6,600
Cost of goods sold 4,800
Credit Merchandise Inventory 4,800
Accounts receivable 6,600
Sales 6,600
Accounts receivable 6,600
Credit Sales 6,600
Cost of goods sold 4,800
Credit Merchandise Inventory 4,800
Accounts receivable 4,800
Sales 4,800
- 8. Multiple Choice
On September 12, Vander Company sold merchandise in the amount of $7,400 to Jepson Company, with credit terms of 3/10, n/30. The cost of the items sold is $4,800. Jepson uses the periodic inventory system and the gross method of accounting for purchases. Jepson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Jepson makes on September 18 is:
Purchases 7,178
Cash 7,178
Accounts payable 7,400
Credit Merchandise inventory 222
Credit Cash 7,178
Accounts payable 7,400
Credit Purchases discounts 222
Credit Cash 7,178
Cash 7,178
Accounts receivable 7,178
Cash 7,178
Purchases discounts 222
Credit Accounts payable 7,400
- 9. Multiple Choice
Cushman Company had $830,000 in sales, sales discounts of $12,450, sales returns and allowances of $18,675, cost of goods sold of $394,250, and $285,520 in operating expenses. Net income equals:
$798,875.
$150,230.
$404,625.
$119,105.
$181,355.
- 10. Multiple Choice
A company purchased $8,800 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it returned $440 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:
$8,109.
$8,536.
$8,800.
$8,360.
$8,153.
- 11. Multiple Choice
A company purchases merchandise with a catalog price of $24,500. 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?
$8,894.
$8,575.
$13,894.
$15,925.
$15,606.
- 12. Multiple Choice
A company that uses the net method of recording purchases and a perpetual inventory system purchased $3,600 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $800 worth of merchandise. On July 28, it paid the full amount due. The correct journal entry to record the payment on July 28 is:
Debit Merchandise Inventory $2,800; credit Cash $2,800.
Debit Cash $2,800; credit Accounts Payable $2,800.
Debit Accounts Payable $2,800; credit Merchandise Inventory $56; credit Cash $2,744.
Debit Accounts Payable $3,600; credit Cash $3,600.
Debit Accounts Payable $2,744; debit Discounts Lost $56; credit Cash $2,800.
- 13. Multiple Choice
On September 12, Ryan Company sold merchandise in the amount of $7,200 to Johnson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,700. Ryan uses the periodic inventory system and the net method of accounting for sales. Johnson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Ryan makes on September 18 is:
Cash 7,200
Accounts receivable 7,200
Cash 4,700
Accounts receivable 4,700
Cash 4,606
Sales discounts 94
Credit Accounts receivable 4,700
Cash 7,056
Accounts receivable 7,056
Cash 7,056
Sales discounts 144
Credit Accounts receivable 7,200
- 14. Multiple Choice
On September 12, Ryan Company sold merchandise in the amount of $7,200 to Johnson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,700. Johnson uses the periodic inventory system and the net method of accounting for purchases. Johnson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Johnson makes on September 18 is:
Purchases 7,056
Cash 7,056
Accounts payable 4,700
Credit Merchandise inventory 94
Cash 4,606
Accounts payable 7,200
Purchases discounts 144
Cash 7,056
Accounts payable 7,056
Cash 7,056
Cash 7,056
Purchases discounts 144
Credit Accounts payable 7,200
- 15. Multiple Choice
A company's current assets are $18,940, its quick assets are $10,370 and its current liabilities are $12,500. Its quick ratio equals:
0.83.
1.21.
1.51.
1.83.
2.34.
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