Chapter 5 Quiz.docx - Chapter 5 Quiz 1 Emma Co sold to...

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Chapter 5 Quiz 1. Emma Co. sold to Isabella Co. merchandise on account FOB shipping point, 2/10, net 30, for $15,000. Emma Co. prepaid the $750 shipping charge. Using the perpetual inventory method, which of the following entries will Isabella Co. make to record the payment for the merchandise if Isabella Co. pays within the discount period? a. Accounts Payable—Emma Co., debit $15,750; Inventory, debit $300; Cash, credit $16,050 b. Accounts Payable—Emma Co., debit $15,000; Cash, credit $15,000 c. Accounts Payable—Emma Co., debit $15,000; Freight In, debit $750; Cash, credit $15,750 d. Accounts Payable—Emma Co., debit $15,450; Cash, credit $15,450 2. A chart of accounts for a merchandising business a. always uses a three-digit numbering system b. usually is standardized by the FASB for all merchandising businesses c. usually requires more accounts than does the chart of accounts for a service business d. usually is the same as the chart of accounts for a service business 3. A company using the periodic inventory system has inventory costing $210 on hand at the beginning of a period. During the period, merchandise costing $635 is purchased. At year-end, inventory costing $160 is on hand. The cost of goods sold for the year is a. $635 b. $265 c. $685 d. $795 4. A company using the periodic inventory system has the following account balances: Inventory at the beginning of the year, $3,600; Freight In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The cost of merchandise purchased is equal to a. $17,230 b. $12,670 c. $8,420 d. $9,070 5. A retailer purchases merchandise with a catalog list price of $30,000. The retailer receives a 15% trade discount and has credit terms of 2/10, n/30. How much cash will be needed to pay this invoice within the discount period? a. $24,990 b. $29,400 c. $24,900 d. $30,000 6. A sales invoice included the following information: merchandise price, $12,000; terms 1/10, n/eom; FOB shipping point with prepaid freight of $900 added to the invoice. Assuming that a credit for merchandise returned of $500 is granted prior to payment and that the invoice is paid within the discount period, what is the amount of cash that should be received by the seller? a. $12,285 b. $11,500 c. $10,480
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d. $11,385 7. Bountiful Company had sales of $650,000 and cost of goods sold of $200,000 during a year. The total assets balance at the beginning of the year was $175,000 and at the end of the year was $167,000. Calculate the asset turnover ratio. a. 3.00 b. 3.80 c. 0.28 d. 0.26 8. Calculate income from operations for Jonas Company based on the following data: Sales $764,000 Operating expenses 52,500 Cost of goods sold 538,000 a. $711,500 b. $485,500 c. $226,000 d. $173,500 9. Bradford Company had sales of $700,000 for a year. The total assets at the beginning of the year were $240,000, and the total assets at the end of the year were $280,000. The asset turnover ratio is (round answer to 2 decimal places) a. 0.40 b. 2.92 c. 0.34 d. 2.69 10. Abbey Co. sold merchandise to Gomez Co. on account, $35,000, terms 2/15, net 45. The cost of the goods sold was $24,500. Abbey Co. issued a credit memo for $3,600 for merchandise returned that originally cost $1,700. Gomez Co. paid the invoice within the discount period. What is the amount of gross profit earned by Abbey Co. on the above transactions?
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