5 60,000 150,000 460,000 520,000 39. The tollowing infornnatiots is availablc fo

Question

5 60,000 150,000 460,000 520,000 39. The tollowing infornnatiots is availablc for Naab Company for 2017: Purshase returns Selling expenN Ending im-selocy The gost of isold, equal to 400% orselling expenses. What is the cost ofgoods available for sale C $1,840000. D) $2.300,o00 Orear Manufacturing signed a non-canccllable sontract with a supplier to ranw materials in 2018 for $700,000. Before the December 31, 2017 balance 40. In 2017, purchase shosr date, the market perice for these materials dropped to $510,000. The journal entry to necond this situation at December 31, 2017 will result in a credit that should be reported A) on the inoome statement B) as a valuution account to Inventory on the balance sheet C) as a current liability. D) as an appropriation of retained earnings 41. Ira savings account pays interest at 4% compounded quarterly, then the amount of $1 leit an deposit for 7 years would be found in a table using A) 2g periods at 4%. B) 7 periods at 4%. 28periods at 1%. 7periods at l%. D) 42. What is interest? A) An equity investment. B) Returs on capital. C) Loun Payment for the use of money. 43. If a company purchases merchandise on terms of 2/10, n/30, the eash discount available (assurning a 360-day year) is equivalent to an effective annual interest rate of A)60% B)2% C) 24% D) 36%

Explanation / Answer

39) Cost of goods sold = Cost of goods available for sale - Closing inventory
So, cost of goods available for sale = Cost of goods sold + Closing inventory
Cost of goods sold = 400%*Selling expense = 400%*$460000 = $1840000
Closing inventory= $520000
Cost of goods available for sale = $1840000+$520000 = $2360000
Option A

40) Since the amount payable for the purchase of inventory has dropped by $700000-$510000 = $290000
Profit on borrowal must be realised to an extent of $290000 by crediting the income statement as this is a profit(reduction in liabilit)
Option A

41) Number of periods per year = 4 quarters
Number of periods for 7 years = 7*4 = 28
Interest per quanrter = 4/4 = 1%
So, the value will be found on 28 periods at 1%
Option C

42) Interest is the cost of borrowal or the payment to be made for use of money
Answer is Option D

43) Cost of trade credit = DIcount percentage/(1-Discount %) * 360/Full allowed payment days - Discount days)
= 2%/100%-2% * 360/30-10
= 36.73% or 36%
Option D

Related Questions

Navigate

• Browse (All)
• Browse 5
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.