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