Practice Quiz Chapter 5 & 6

Chapter 6 SI Tuesday March 3

1. What is the equation for gross profit?

2. What is the difference between the perpetual and periodic inventory systems?

3. What is the difference between FOB shipping point and FOB destination?

5. What is the equation for Net Sales?

6. Which of the following is false regarding a perpetual inventory system? a. Physical counts are never needed since records are maintained on a transaction-by-transaction basis b. The balance in the inventory account is updated with each inventory purchase and sale transaction c. Cost of goods sold is increased as sales are recorded d. The account Purchases is not used as inventory is acquired

7. Purchase discounts with terms, 2/10 n/30 mean e. 10 percent discount for payment within 30 days f. 2 percent discount for payment within 10 days or the full amount (less returns) is due within 30 days g. Two-tenths of a percent discount for payment within 30 days h. None of the above

8. Which of the following is not a component of net sales? a. Sales returns and allowances b. Sales discounts c. Cost of goods sold d. Sales revenue 9. Reporting Net Sales with Credit Sales and Sales Discounts. The following transactions were selected from the records of Evergreen Company: Prepare Journal Entries for the following transactions:

July 12 Sold merchandise to Wally Butler, who paid the $1,000 purchase with cash. The goods cost Evergreen Company $600.

July 15 Sold merchandise to Claudio’s Chair Company at a selling price of $5,000 on terms 3/10, n/30. The goods cost Evergreen Company $3,500.

July 20 Sold merchandise to Otto’s Ottomans at a selling price of $3,000 on terms 3/10, n/30. The goods cost Evergreen Company $1,900.

July 23. Collected payment from Claudio’s Chair Company from the July 15 sale.

Aug. 25. Collected payment from Otto’s Ottomans from the July 20 sale.

Using the journal entries above compute net sales for the two months ended August 31. 10. Bank Statement Checks Deposits Other Balance Balance, May 1 $18,800 2-May $8,000 $26,800 5-May #301 $11,000 $15,800 7-May #302 $6,000 $9,800 8-May $10,000 $19,800 14-May #303 $500 $19,300 17-May Interest $120 $19,420 22-May NSF $280 $19,140 27-May #304 $4,600 $14,540 31-May Service Charge $60 $14,480 Balance, May 31 $14,480

Book Cash T-Account (Deposits are the debits, and checks are the credits)

Cash 1-May $ 18,800 1-May $ 8,000 $ 11,000 #301 7-May $ 10,000 $ 6,000 #302 29-May $ 4,000 $ 500 #303 $ 4,600 #304 $ 1,300 #305 31-May $ 17,400

Prepare bank reconciliation: