Question

1)Rebecca Department Stores reported the following amounts in its adjusted trial balance prepared as of its December 31 year-end:

Administrative Expenses, $925

Cost of Goods Sold, $10,014

Delivery (freight-out) Expense, $695

Income Tax Expense, $1,153

Interest Expense, $1,065

Interest Revenue, $915

General Expenses, $1,009

Sales Revenue, $34,001

Sales Discounts, $3,656

Sales Returns and Allowances, $714

.Rebecca’s operating expenses are $____________

2)Merchandise costing $739 is sold for $1,676 on terms 2/10, n/30. If the buyer pays within the discount period, When collection of cash within the 10 days, the debit to Cash will be $____

3)If beginning inventory is $1,325, ending inventory is $1,878 and cost of goods sold is $12,883, how much is purchases?

Answer 1

1.

Operating expenses = Delivery (freight-out) Expense + General Expenses + Administrative Expenses

= 695+1,009+925

= $2,629

2.

Sales = $1,676

Sales discount = Sales x discount rate

= 1,676 x 2%

= $33.52

Cash to be received = Sales - Sales discount

= 1,676-33.52

= $1,642.48

Hence, debit to cash will be = $1,642.48

3.

Beginning inventory = $1,325

Ending inventory = $1,878

Cost of goods sold = $12,883

Cost of goods sold = Beginning inventory + Purchases - Ending inventory

12,883 = 1,325+Purchases-1,878

Purchases = $13,436

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