classroom+example+9-30-08(2) - Assume the perpetual...

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Assume the perpetual inventory method is used. 1) The company purchased $5,000 of merchandise on account under terms 2/10, n/30. 2) The company returned $600 of merchandise to the supplier before payment was made. 3) The liability was paid within the discount period. 4) All of the merchandise purchased was sold for $6,500 cash. 49. What effect will the return of merchandise to the supplier have on the accounting equation? a. Assets and equity are reduced by $600. b. Assets and liabilities are reduced by $570. C . Assets and liabilities are reduced by $600. d. Liabilities and equity are reduced by $600. AACSB: Analytic AICPA: FN – Measurement Difficulty: Easy Learning Objective: 2 50. The amount of gross margin from the four transactions is: A . $2,188. b. $2,320. c. $1,500. d. $1,283. AACSB: Analytic AICPA: FN – Measurement Difficulty: Medium Learning Objective: 2
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51. The net cash flow from operating activities as a result of the four transactions is: a. $2,320. b. $6,500. C . $2,188. d. $2,540. AACSB: Analytic AICPA: FN – Reporting Difficulty: Medium Learning Objective: 2 52. Gutter Company sold merchandise costing $1,600 for $2,500 cash. The merchandise was later returned by the customer. If the perpetual inventory method is used, what effect will the sales return have on the accounting equation? a. Total assets and total equity increase by $900. b. Total assets increase by $1,600 and total equity is decreased by $2,500.
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