Question

Annual depreciation on equipment amounted to $27,950 for the current year. What account would we debit when we record this adjusting entry in the general journal?

a) depreciation expense

b) equipment

c) cash

What is gross profit for a merchandiser calculated as?

a) net sales minus cost of goods sold

b) gross sales minus cost of goods sold

c) net sales minus merchandise inventory

d) gross sales minus merchandise inventory

On August 1, our company purchases $1,000 worth of merchandise inventory on credit with the terms 2/10, n/30. What is the amount we would credit to cash if we pay this invoice on August 9?

a) $1,000

b) $998

c) $990

d) $980

Our company purchases $4,000 worth of merchandise inventory on credit with the terms 2/10, n/30. Transportation costs were an additional $200. Our company returned $300 worth of merchandise. What is the total cost of this merchandise if our company paid the invoice within the discount period?

a) $3,426

b) $3,826

c) $4,018

d) $4,410

Answer 1

1) Adjusting entry for depreciation

date	account and explanation	Debit	Credit
	Depreciation expense	27950
	Accumulated depreciation-equipment		27950
	(To record Dep)

So answer is a) Depreciation expense

2) Gross profit = Net sales-Cost of goods sold

So answer is a) net sales minus cost of goods sold

3) Cash credit = 1000-(1000*2%) = 980

So answer is d) $980

4) Calculate total amount paid

Cost	4000
Purchase return	-300
Purchase discount (3700*2%)	-74
Freight	200
total Cost of merchandise	3826

So answer is b) $3826