Homework Session 10 Spring 2010

Homework Session 10 Spring 2010 - Homework Session 10...

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Homework Session 10 Spring 10 ANSWERS TO MULTIPLE CHOICE 1. b) 2. b) 3. b) 4. d) 5. c) 6. c) 7. d) 8. b) 9. d) 10. c) E6–3. Sales revenue ($350 + $4,500 + $9,000). .................................. $13,850 Less: Sales returns and allowances ( 1 / 10 x $9,000 from D). ....... 900 Less: Sales discounts ( 9 / 10 x $9,000 from D x 3%). .................... 243 Less: Credit card discounts ($350 from B x 2%). ....................... 7 Net sales. .................................................................................... $12,700
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E6–7. Req. 1 SLATE, INCORPORATED Income Statement For the Year Ended December 31, 2010 Amount Percentage Gross sales ($223,000 + $40,000). .................... $263,000 Less sales returns and allowances. ................... 8,000 Net sales revenue. .............................................. 255,000 100% Cost of goods sold. ............................................. 143,000 56 % Gross profit . ....................................................... 112,000 44% Operating expenses: Administrative expense. ................................... $20,000 Selling expense. ............................................... 45,200 Bad debt expense ($40,000 x 3%). .................. 1,200 66,400 26 % Income from operations. ..................................... 45,600 18% Income tax expense ($45,600 x 30%). ............. 13,680 5 % Net income. ........................................................ $ 31,920 13 % Earnings per share ($31,920 ÷ 4,000 shares) $7.98 Req. 2 Gross profit margin: $255,000 – $143,000 = $112,000 . Gross profit percentage ratio: $112,000 ÷ $255,000 = .44 (or 44%). Gross margin or gross profit in dollars is the difference between the sales prices and the costs of purchasing or manufacturing all goods that were sold during the period (sometimes called the markup); that is, net revenue minus only one of the expenses-- cost of goods sold. The gross profit ratio is the amount of each net sales dollar that was gross profit during the period. For this company, the rate was 44%, which means that $.44 of each net sales dollar was gross profit (alternatively, 44% of each sales dollar was gross profit for the period).
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E6–9. (a) Bad debt expense (+E, –SE) ($790,000 x 0.03). ....... 23,700 Allowance for doubtful accounts (+XA, –A). ....... 23,700 To record estimated bad debt expense. (b) Allowance for doubtful accounts (–XA, +A) . .............. 240 Accounts receivable (–A). .................................. 240 To write off a specific bad debt.
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E6–12. Aged accounts receivable
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This note was uploaded on 04/25/2010 for the course HADM 1121 taught by Professor Dittman during the Spring '07 term at Cornell.

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Homework Session 10 Spring 2010 - Homework Session 10...

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