Question

1. On July 1, Darin Company sold inventory costing $4,500 to Dee Company for $6,000, terms 2/10, n/30. Both companies use a perpetual inventory system. What journal entry will be recorded by Dee Company on July 1?

A) Debit Purchases and credit Accounts Payable for $6,000

B) Debit Inventory and credit Accounts Receivable for $6,000

C) Debit Inventory and credit Accounts Payable for $6,000

D) Debit Cost of Goods Sold and credit Inventory for $4,500

1. On June 15, Oakley Inc. sells inventory on account to Sunglass Hut (SH) for $1,000, terms 2/10, n/30. On June 20, SH returns to Oakley inventory that SH had purchased for $300. On June 24, SH completely fulfills its obligation to Oakley by making a cash payment. What is the amount of cash paid by SH to Oakley?

A) $680

B) $686

C) $700

D) $1,000

2. Sales revenue equals $367,810, sales returns & allowances are $10,000, and sales discounts total $14,180. The cost of goods sold is $216,490, operating expenses are $28,500, and the company incurs $31,640 of income tax expense. Which of the following statements is correct?

A) Net sales equal $343,630 and gross profit is $98,640.

B) Net sales equal $67,000 and gross profit is $98,640.

C) Net sales equal $343,630 and gross profit is $127,140.

D) Net sales equal $367,810 and gross profit is $67,000.

3. Tony’s Market recorded the following events involving a recent purchase of inventory:

Received goods for $80,000, terms 2/10, n/30.

Returned $1,600 of the shipment for credit.

Paid $400 freight on the shipment.

Paid the invoice within the discount period.

As a result of these events, the company’s inventory

a.   increased by $76,832.

b.   increased by $78,800.

c.   increased by $77,224.

d.   increased by $77,232.

Answer 1

Answer 1
Journal entry In the Books of Dee Company
Date	Particulars	Debit	Credit
July 1.	Inventory	$6,000
	To Accounts Payable		$6,000
Correct Option	C) Debit Inventory and credit Accounts Payable for $6,000
Answer 2	Calculating Cash payment by Oakley to SH on June 24.
	Particulars	Amount($)
	Total Purchase on June 15.	$1,000
	Less:- Purchase Return on June 20.	-$300
	Net Purchase	$700
	Less:- Discount @2% on Net Purchase	-$14
	Cash payment on June 24.	$686
Correct Option	B) $686
Answer 3	Calculating Net sales revenue and Gross profit
	Particulars	Amount($)
	Sales Revenue	$367,810
	Less:- Sales Return	-$10,000
	Less:- Sales Discount	-$14,180
	Net sales Revenue	$343,630
	Calculating Gross Profit
	Particulars	Amount($)
	Net sales Revenue	$343,630
	Less :- Cost of Goods Sold	-$216,490
	Gross Profit	$127,140
Correct Option	C) Net sales equal $343,630 and gross profit is $127,140.
Answer 4	Calculating effect on inventory of Tony's Market .
	Particulars	Amount($)
	Total Purchase on June 15.	$80,000
	Less:- Purchase Return on June 20.	-$1,600
	Net Purchase	$78,400
	Less:- Discount @2% on Net Purchase	-$1,568
	Cash payment on June 24.	$76,832
	Add:- Freight on Shipment	$400
	Inventory increased by	$77,232
Correct Option	d)   increased by $77,232.