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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