Chapter 1 Problem 8-4 to 10
Problem 8-4 Answer B Problem 8-5 Answer D
Inventory – January 1 500,000 Cost of sales (3,640,000/130%) 2,800,000
Purchases 2,500,000
Goods available for sale 3,000,000 Problem 8-7 Answer A
Less: Cost of sales (3,200,000 x 75%) 2,400,000
Inventory – December 31 600,000 Inventory – Jan. 1 1,200,000
Less: Physical inventory 500,000 Purchases 2,000,000
Missing inventory 100,000 Goods available for sale 3,200,000
Less: Inventory – Dec. 31 1,100,000
Problem 8-6 Answer D Cost of goods sold 2,100,000
Gross profit 900,000
Cost of sales (7,000,000 – 1,400,000) 5,600,000 Total sales 3,000,000
Multiply by 140% Less: Cash sales 500,000
Sales 7,840,000 Sales on account 2,500,000
Less: Collections 4,000,000 Accounts receivable–Jan. 1 800,000
Accounts receivable 3,840,000 Total 3,300,000
Less: Collections 2,600,000
Accounts receivable-Dec. 31 700,000
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Problem 8-8 Answer D Problem 8-9 Answer B
Net sales = 1,200,000 x 5 6,000,000 Sales (950,000 x 8) 7,600,000
Cost of sales (1,150,000 x 4) 4,600,000
Inventory – January 1 1,800,000 Gross margin 3,000,000
Purchases 4,500,000
Goods available for sale 6,300,000
Less: Cost of sales (6,000,000 x 60%) 3,600,000
Inventory – December 31 2,700,000
Problem 8-10 Answer B
Sales 6,200,000
Less: Sales returns 200,000
Net sales 6,000,000
Cost of sales:
Inventory – January 1 1,000,000
Purchases 5,500,000
Freight in 250,000
Total 5,750,000
Less: Purchase returns, allowances and discounts 150,000 5,600,000
Goods available for sale 6,600,000
Less: Inventory – December 31 2,100,000 4,500,000
Gross income 1,500,000
Gross profit rate on cost (1,500,000/4,500,000) 33 1/3%
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