Chapter 8 sample test

# Chapter 8 sample test - Chapter 8 sample test 1 The First...

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Chapter 8 sample test 1. The First Corporation began the month of January with 300 stereo speakers on hand. The First Corporation had paid \$30 for each speaker. During January, the company purchased 900 additional speakers at a cost of \$30 each. After inspecting the 900 speakers purchased in January, the company returned 10 speakers to its supplier for full credit of \$30 each. During January, the company sold 1,000 speakers and charged its customers \$80 per speaker. Determine the company’s cost of goods sold for January. The key to this problem is to recognize that the cost of goods sold represents the First Corporation's cost of the 1,000 speakers it sold to its customers in January. Since each speaker cost the First Corporation \$30, the company's cost of goods sold is \$30,000 (1,000 speakers x \$30 cost per speaker). See text exercise 8.1 for similar material. 2. The Second Corporation began the month of February with 300 stereo speakers on hand. The Second Corporation had paid \$30 for each speaker. During February, the company purchased 900 additional speakers at a cost of \$30 each. After inspecting the 900 speakers purchased in February, the company returned 10 speakers to its supplier for full credit of \$30 each. During February, the company sold 1,000 speakers and charged its customers \$80 per speaker. The company’s February operating expenses were \$40,000. The company’s expected income taxes expense was \$3,700. Determine the company’s net income for February. The key to this problem is to understand the components of the income statement of a merchandising company. The company's February net income is \$6,300. Sales (1,000 units x \$80 per unit) \$80,000 Cost of goods sold (1,000 units x \$30 per unit) \$30,000 Gross Profit \$50,000 Operating expenses \$40,000 Income before taxes \$10,000 Income taxes expense \$3,700 Net income \$6,300 See text exercise 8.1 for similar material. 3. The Third Corporation reported the following information for its year ended March 31. Sales \$80,000 Cost of goods sold \$30,000 Gross Profit \$50,000 Operating expenses \$40,000

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Income before taxes \$10,000 Income taxes expense \$3,500 Net income \$6,500 Determine the company’s gross profit percentage for the year ended March 31. The key to this problem is to recognize that the gross profit percentage is calculated by dividing gross profit by net sales. The Third Corporation's gross profit percentage for the year ended March 31 is 62.5%. Gross profit percentage = gross profit / net sales. Gross profit percentage = \$50,000 / \$80,000 = .625 Gross profit percentage = 62.5%. See text exercise 8.2 for similar material. 4. The Fourth Corporation began April with \$2,100 of merchandise inventory on hand. The company purchased additional merchandise during April. After inspecting its merchandise purchases, the company returned \$800 of merchandise to one of its suppliers for full credit. The company sold \$12,000 of merchandise during April and charged its customers \$21,000. At the end of April, the company had \$3,000 of
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## This note was uploaded on 10/09/2011 for the course ACCT 60.201 taught by Professor Monty during the Spring '11 term at UMass Lowell.

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Chapter 8 sample test - Chapter 8 sample test 1 The First...

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