Which of the following statements correctly describes the effectof recording the collection of a $10,000 account receivable forwhich a 2% sales discount was recorded at the time ofcollection?
Current assets will remain the same.
Gross profit will decrease $200.
Accounts receivable will decrease $9,800.
Net sales will increase $9,800.
Which of the following correctly describes credit terms of 2/10,n/30?
A two percent discount for early payment is available if theinvoice is paid before the tenth day of the month following themonth the sale.
A two percent discount for early payment is available within tendays of the date of sale.
A ten percent discount for early payment is available if theinvoice is paid within two days of the date of the invoice.
A two percent discount for early payment is available if theinvoice is paid after the tenth day, but before the thirtieth dayof the invoice date.
A company purchased goods on credit with credit terms of 3/15,n/45. Although the company does not have cash available to paywithin the discount period, the manager of the company isconsidering borrowing money to take advantage of the discount. Inorder to make the appropriate decision, the manager computed theannual interest rate associated with the sales discount. Which ofthe following is the annual interest rate (rounded)? (Use 365 daysa year.)
56%.
38%.
25%.
18%.
Oakwood Company had accounts receivable of $750,000 and anallowance for doubtful accounts of the $21,500 just prior towriting off as worthless an account receivable for Hyland Companyof $5,000. The net realizable value of accounts receivable as shownby the accounting records before and after the write-off was asfollows:
Option A
Option B
Option C
Option D
The Rye Corporation has provided the following information:
• Total sales were $1,200,000.
• Beginning net accounts receivable was $45,000.
• Ending net accounts receivable was $65,000.
• Sales returns and allowances totaled $100,000.
What was Rye’s receivable turnover ratio?
21.8
18.5
10.0
20.0
Which of the following is not a component of the gross profitcalculation?
Cost of goods sold
Sales returns and allowances
Allowance for doubtful accounts
Credit card discounts
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