Supplemental Instruction
Iowa State University / Leader:
Course:
Instructor:
Date:
Define the following in your own words.
- Sales returns and allowances
______
- Sales discount
______
- Multistep income statement
______
- Gross profit
______
- Gross profit percentage
______
- Which of the following internal control principles underlies the requirement that all customers be given a sales receipt?
- Segregate duties
- Establish responsibility
- Restrict access
- Document procedures
- Which of the following is false regarding a perpetual inventory system
- Physical counts are never needed because records are maintained on a transaction-by-transaction basis
- The inventory records are updated with each inventory purchase, sale, or return
- Cost of goods sold is increased as sales are recorded
- A perpetual inventory system can be used to detect shrinkage
- Which of the following does not enhance internal control?
- Assigning different duties to different employees
- Ensuring adequate documentation is maintained
- Allowing access only when required to complete assigned duties
- None of the above- all enhance internal control
- This year your company has purchased less expensive merchandise inventory but has not changed its selling prices. What effect will this change have on the company’s gross profit percentage this year, in comparison to last year?
- The ratio will not change
- The ratio will increase
- The ratio will decrease
- Cannot determine
- Sales discounts with terms 2/10, n/30 mean
- 10 percent discounts for payment received within 30 days of the date of sale
- 2 percent discount for payment received within 10 days or the full amount (less returns) is due within 30 days
- Two-tenths of a percent discount for payment received within 30 days
- None of the above
Cycle Wholesaling sells merchandise on credit terms of 2/10, n/30. A sale for $800 (cost of goods sold of $500) was made to Sarah’s Cycles on February 1, 2010. Assume Cycle Wholesaling uses a perpetual inventory system
14. Give the journal entry Cycle Wholesaling would make to record the sale.
15. Give the journal entry to record the collection of the account, assuming it was collected in full on February 9, 2010.
16. Give the journal entry, assuming instead that the account was collected in full on March 2, 2010.
17. Calculate the gross profit percentage for the sale assuming the account was collected in full on February 9, 2010.