Question

1) On March​ 15, Maxwell Plush sold and shipped merchandise on account for​ $6,000 to Kittson Amusement​ Park, terms FOB shipping​ point, n/30.​ Maxwell's cost of goods sold is​ 40% of sales. How is Maxwell impacted by this sale on March​ 15?

A.

Its assets will​ increase, as will its equity.

B.

Its assets will remain the​ same, while its equity decreases.

C.

Its assets will remain the​ same, while its equity increases.

D.

Its assets will​ increase, while its equity remains the same

2) Washington Products offers credit terms of​ 3/10, n/45. Which of the following statements is​ correct?

A.

The customer can take a​ 3% discount if the bill is paid within 45 days of the invoice date.

B.

No discount is offered for early payment.

C.

The total amount of the invoice must be paid within 10 days of the invoice date.

D.

A discount of​ 3% can be taken if the invoice is paid within 10 days of the invoice date



3) What is the maturity value of a $ 30 comma 000$30,000​, 1515​%, ​six-month note?

Answer 1

1	A. Its assets will increase as well as its equity.
	On March 15, Sale of merchandise on account , it will increase Accounts receivable and get reduce inventory. The difference of sales minus cost of goods sold will increase in equity.
2	meaning of credit term 3/10 , n/45
	A discount of 3 % can be taken if the invoice is paid within 10 days of the invoice date, otherways normal credit period is 45 days without discount.
3	Maturity value of $ 30,000 15.15% six-month note= $ 30,000 + (30,000 *15.15% x 6/12) = $ 32,272.50