1. For a manufacturer, inventory turnover refers to how many times: a the compan

Question

1. For a manufacturer, inventory turnover refers to how many times:

a the company purchases and sells its inventory of finished goods.

b during the period the company replaces the raw materials inventory.

c the company orders raw materials.

d the company produces its goods and delivers the inventory to customers.

2. On July 1, 2016, Empire Inc. lends $8,000 to a customer and receives a 9% note due in two years. Interest is due in full on July 1, 2018, the due date of the note. What is the amount of Interest Revenue that will be reported on Empire's income statement for the year ended December 31, 2016?

a $720

b $420

c $1,440

d $360

Explanation / Answer

Pleasse note that the amount of $7000 is lended @9% interest per year. So the yearly interest will be $72 ( $7000 * 9%).

Now as we have to book the interest as on 31 dec 2016 which will be only six month from date of lending hence only half year interest will be booked on 31st Dec 16.

Interest to book = $720 / 2

= $360

So d is the correct answer. Please let me know for any query.

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