1. Breanna Boutique reported the following year-end information:
Cash / $53,000Short-term investments / 11,000
Accounts receivable / 55,000
Inventory / 326,000
Prepaid expenses / 15,500
Accounts payable / 102,500
Other current payables / 29,000
The current ratio and acid-test ratio for the boutique are ______and ______, respectively:
/ 3.50 and .90/ 2.21 and 1.31
/ 2.48 and 1.31
/ None of these
/ 1.16 and
2. Karen Betz had net sales of $28,119 million, its cost of goods sold was $19,011 million, and its net income was $957 million. Its gross margin ratio (rounded) equals:
/ 32.4%./ 64.2%.
/ 3.4%.
/ 35.6%.
/ 67.6%
3. A company had sales of $388,000 and its gross profit was $155,000. Its cost of goods sold equals:
/ $155,000./ $233,000.
/ $543,000.
/ $(233,000).
/ $(543,000).
4. A buyer failed to take advantage of the vendor's credit terms of 2/12, n/43, but instead paid the invoice in full at the end of 55 days. By not taking advantage of the cash discount, the buyer lost the equivalent of ______annual interest on the amount of the purchase.
/ 9.2%/ 13.3%
/ 30.4%
/ 17.0%
/ 23.5%
5. A company had sales of $699,000 and cost of goods sold of $284,000. Its gross margin equals:
/ $(983,000)./ $983,000.
/ $284,000.
/ $415,000.
/ $(415,000).
6. A company's gross profit was $83,150 and its net sales were $349,200. Its gross margin ratio (rounded) equals:
/ .24%./ .04%.
/ 23.8%.
/ $83,150.
/ $349,200.
7. A company purchased $6,000 worth of merchandise. Transportation costs were an additional $450. The company later returned $245 worth of merchandise and paid the invoice within the 4% cash discount period. The total amount paid for this merchandise is:
/ $5,524.80./ $5,974.80.
/ $5,092.80.
/ $5,573.00.
/ $6,445.20.
8. ABC Company had cash sales of $95,550, credit sales of $83,390, sales returns and allowances of $1,600, and sales discounts of $3,635. ABC's net sales for this period equal:
/ $175,305./ $90,315.
/ $177,340.
/ $180,975.
/ $173,705.
9. A company records the following journal entry: debit Cash $1,330, debit Sales Discounts $70, and credit Accounts Receivable $1,400. This means that a customer has taken a ___ cash discount for early payment.
/ 3%/ 4%
/ 9%
/ 8%
/ 5%
10. A company purchased $3,500 of merchandise on January 5. On January 7, it returned $700 worth of merchandise. On January 8, it paid the balance in full, taking a 3% discount. The amount of the cash paid on January 8 equals:
/ $4,074./ $3,395.
/ $2,016.
/ $700.
/ $2,716.
11. XYX Corporation total quick assets were $5,886,000, its current assets were $11,800,000 and its current liabilities were $8,000,000. Its acid-test ratio (rounded) equals:
/ 1.48./ 1.36.
/ .74.
/ .50.
/ .74.
12. A company records the following journal entry: debit Cash $1,316, debit Sales Discounts $84, and credit Accounts Receivable $1,400. This means that a customer has taken a ___ cash discount for early payment.
/ 5%/ 9%
/ 4%
/ 10%
/ 6%
13. A company's current assets were $17,790, its quick assets were $11,750 and its current liabilities were $12,210. Its quick ratio (rounded) equals:
/ 1.46./ .96.
/ .49.
/ .69.
/ 1.04
14. A company had sales of $385,000 and its gross profit was $153,000. Its cost of goods sold equals:
/ $232,000./ $(538,000).
/ $538,000.
/ $(232,000).
/ $153,000.
15. On October 1, Courtland Company sold merchandise in the amount of $5,600 to Carter Company, with credit terms of 3/10, n/30. The cost of the items sold is $4,000. Courtland uses the periodic inventory system. Carter pays the invoice on October 8, and takes the appropriate discount. The journal entry that Courtland makes on October 8 is:
/ Cash / 5,432Accounts receivable / 5,432
/ Cash / 5,432
Sales discounts / 168
Accounts receivable / 5,600
/ Cash / 5,600
Accounts receivable / 5,600
/ Cash / 4,000
Accounts receivable / 4,000
/ Cash / 3,880
Sales discounts / 120
Accounts receivable / 4,000
16. A company's net sales were $671,600, its cost of good sold was $237,800 and its net income was $33,150. Its gross margin ratio (rounded) equals:
/ 64.59%./ 35.4%.
/ 135.4%.
/ 69.7%.
/ 13.1%.
17. MNC Corporation total quick assets were $5,880,000, its current assets were $11,900,000 and its current liabilities were $7,000,000. Its acid-test ratio (rounded) equals:
/ 1.19./ .86.
/ .49.
/ .84.
/ 1.70.
18. Herald Company had sales of $105,000, sales discounts of $1,700, and sales returns of $3,900. Herald Company's net sales equals:
/ $99,400./ $101,100.
/ $5,600.
/ $103,300.
/ $110,600.
19. On August 1, Michele Company sold merchandise in the amount of $3,500 to Alberts, with credit terms of 1/10, n/30. The cost of the items sold is $4,000. Michele uses the perpetual inventory system. Alberts pays the invoice on August 8, and takes the appropriate discount. The journal entry that Michele makes on August 8 is:
/ Cash / 3,500Accounts receivable / 3,500
/ Cash / 4,000
Accounts receivable / 4,000
/ Cash / 3,960
Sales discounts / 40
Accounts receivable / 4,000
/ Cash / 3,465
Sales discounts / 35
Accounts receivable / 3,500
/ Cash / 3,465
Accounts receivable / 3,465
20. A company had sales of $685,000 and cost of goods sold of $294,000. Its gross margin equals:
/ $391,000./ $294,000.
/ $(391,000).
/ $979,000.
/ $(979,000).
21. A company has net sales and cost of goods sold of $747,000 and $545,000, respectively. Its net income is $17,450. The company's gross margin and operating expenses are ______and ______, respectively.
/ $202,000; $184,550/ $730,000; $202,000
/ $202,000; $729,550
/ $184,550; $202,000
/ $729,550; $527,550
22. The credit terms 2/10, n/30 are interpreted as:
/ 30% discount if paid within 2 days./ 30% discount if paid within 10 days.
/ 10% cash discount if the amount is paid within 2 days, with balance due in 30 days.
/ 2% cash discount if the amount is paid within 10 days, with the balance due in 30 days.
/ 2% discount if paid within 30 days.
23. n August 1, Robertson Company sold merchandise in the amount of $5,300 to Adam, with credit terms of 3/10, n/30. The cost of the items sold is $4,400. Robertson uses the perpetual inventory system. On August 4, Adam returns some of the merchandise. The selling price of the merchandise is $530 and the cost of the merchandise returned is $440.The entry or entries that Robertson must make on August 4 is:
/ Accounts receivable / 530Sales returns and allowances / 530
Cost of goods sold / 440
Merchandise inventory / 440
/ Sales returns and allowances / 530
Accounts receivable / 530
Merchandise inventory / 440
Cost of goods sold / 440
/ Accounts receivable / 530
Sales returns and allowances / 530
/ Sales returns and allowances / 530
Accounts receivable / 530
/ Sales returns and allowances / 440
Accounts receivable / 440
24. On August 1, Fernanda Company sold merchandise in the amount of $5,000 to Alberts, with credit terms of 3/10, n/30. The cost of the items sold is $4,200. Fernanda uses the perpetual inventory system. The journal entry or entries that Fernanda will make on August 1 is:
/ Accounts receivable / 4,200Sales / 4,200
/ Sales / 5,000
Accounts receivable / 5,000
/ Accounts receivable / 5,000
Sales / 5,000
/ Sales / 5,000
Accounts receivable / 5,000
Cost of goods sold / 4,200
Merchandise Inventory / 4,200
/ Accounts receivable / 5,000
Sales / 5,000
Cost of goods sold / 4,200
Merchandise inventory / 4,200
25. A buyer failed to take advantage of the vendor's credit terms of 3/19, n/44, but instead paid the invoice in full at the end of 63 days. By not taking advantage of the cash discount, the buyer lost the equivalent of ______annual interest on the amount of the purchase.
/ 24.9%/ 43.8%
/ 17.4%
/ 28.8%
/ 9.9%