ACC 210P Chapter 5

ACC 210P Chapter 5 - your recommendation with a calculation...

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ACC 210P Chapter 5 1. Financial information is presented below: Operating Expenses $ 45,000 Sales Returns and Allowances 13,000 Sales Discount 6,000 Sales 160,000 Cost of Goods Sold 77,000 The amount of net sales on the income statement would be a. $154,000. b. $141,000. c. $160,000. d. $166,000. Gross Profit would be a. $77,000. b. $70,000. c. $64,000. d. $83,000. The gross profit rate would be a. .454. b. .546. c. .500. d. .538. The profit margin ratio would be a. .454. b. .119. c. .238. d. .135.
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2. Jan Huff is a new accountant with Smart Company. Smart purchased merchandise on account for $7,000. The credit terms are 1/10, n/30. Jan has talked with the company's banker and knows that she could earn 6% on any money invested in the company's savings account. Instructions (a) Should Jan pay the invoice within the discount period or should she keep the $7,000 in the savings account and pay at the end of the credit period? Support
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Unformatted text preview: your recommendation with a calculation showing which action would be best. (b) If Jan forgoes the discount, it may be viewed as paying an interest rate of 1% for the use of $7,000 for 20 days. Calculate the annual rate of interest that this is equivalent to. 3. The following information is available for Partin Company: Sales $598,000 Sales Returns and Allowances 20,000 Cost of Goods Sold 398,000 Selling Expense 69,000 Administrative Expense 25,000 Interest Expense 19,000 Interest Revenue 20,000 Instructions 1. Use the above information to prepare a multiple-step income statement for the year ended December 31, 2007. 2. Compute the profit margin ratio and return on assets ratio. Partin Companys assets at the beginning of the year were $770,000 and were $830,000 at the end of the year....
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This note was uploaded on 03/10/2011 for the course ACC 210 taught by Professor Staff during the Spring '07 term at N.C. State.

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ACC 210P Chapter 5 - your recommendation with a calculation...

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