Please help with questions 5, 6, 7, 8. 3. If a c goods sold A. ompany\'s per uni

Question

Please help with questions 5, 6, 7, 8.

3. If a c goods sold A. ompany's per unit cost of inventory purchases increased during the year, yet the cost of as a % of sales revenues was lower than the prior year, then for the current year gross margin as a % of sales revenues must have decreased B. sales price per unit must have increased. C. sales volume must have increased. D. sales price per unit must have increased and sales volume must have increased. 4. If a company improves their timely collection of accounts receivables reducing the average period of time receivables are outstanding, then receivables turnover has A. increased B. decreased C. remained unchanged D. The answer cannot be determined from information provided. 5. Given the following information for the year ended 12/31/X3: 12/31/X3 Balances DR(CR) Sales Revenues Selling and Administrative Expense 42,000 Sales Discounts Sales Returns and Allowances Cost of Goods Sold Interest Expense Determine the 20X3 gross margin A. $22,000 B. $26,000 C. $39,000 D. $68,000 E. none of these $(210,000) 6,000 11,000 125,000

Explanation / Answer

Question 5 - Answer is D

Calculation:

Question 6 - Answer is E

Explanation:

Undere perpetual inventory system, journal entry for purchases on account basis is:

**$6,000 = 20 tables x $300 per table

Question 7 - Answer is c

Explanation:

1/10 means: If Jones pay the amount for purchases within 10 days from the date of invoice, jones will get 1 percent discount on the invocie amount.

N/30 means : Jones is liable to pay the net amount within 30 days.

Since Jones paid for purchases on Jan.10 which is within 10 days from the date of invocie (Jan. 2), Jones is eligible for the discount.

Purchase discount = Invoice amount x 1% = $6,000 x 1% = $60

Under perpetual inventory system, this disount is recorded by crediting to inventoy. This credit will decrease the cost of the inventoy.

Therefore the journal entry for payment would is as follows:

The above jounral entry includes a credit to inventory for $60.

Question 8 - Answer is C

Explanation:

(i) Under perpetual inventory system, two journal entries are required to be made on the date of sale.

a. Jounral entry to record the sales on account basis made on Jan 14

**$2,500 = 5 tables x $500 per table

b. Jounral entry to record the cost of goods sold on Jan 14

**$1,500 = 5 tables x $300 per table

(ii) Under perpetual inventory system, two journal entries are required to be made on the date of sales returns

c. Jounral entry to record the sales returns on Jan 14

d. Jounral entry to record the inventory received from the customer on Jan 14

Amount Amount Sales $210,000 Less: Sales discounts (6,000) Less: Salesr returns and Allowances (11,000) Net sales $193,000 Less: Cost of Goods SOld ($125,000) Gross Margin $68,000

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