Question

1a.

Given: net sales, $185,200; total operating expenses, $95,200. What percent of net sales are operating expenses? Round to the nearest tenth of a percent.

a		48.6%
b		51.4%
c		94.5%
d		194.5%

1b.

Given: Cash, $74,000; accounts receivable, $77,000; merchandise inventory, $165,000; prepaid expenses, $1,000; land for future expansion, $225,000; accounts payable, $54,000. Calculate the equity of the business.

a		$486,000
b		$596,000
c		$542,000
d		$488,000

1c.

Given: gross sales, $340,000; sales returns, $3,500; sales discounts, $2,000; beginning inventory, $112,000; cost of goods purchased, $265,000; ending inventory, $128,000; operating expenses, $65,000. Calculate net income.

a		$915,500
b		$20,500
c		$269,500
d		$334,500

Answer 1

1a The percent of net sales that are operating expenses= total operating expenses/ net sales*100

= $95,200/  $185,200*100

= 51.40%

= 51.4%

Hence the correct answer is b. 51.4%

1b

Total Assets = Total Liabilities + Total Equity

or Cash+ accounts receivable+ merchandise inventory+ prepaid expenses+ land for future expansion= accounts payable+ Equity

or $74,000 + $77,000+ $165,000+$1,000 +  $225,000 = $54,000 + Equity

or Equity = $ 542,000 - $ 54000

= $ 488,000

Hence the correct answer is $ 488,000

1c.The correct answer is b. $ 20,500

Note :

Particulars	Amount ($)	Particulars	Amount ($)
Beginning Inventory	1,12,000	Gross Sales	3,40,000
Cost of Goods Purchased	2,65,000	Less: Sales Returns	3,500
Operating Expenses	65,000	Less: Sales Discounts	2,000
Net Income (Balancing Figure)	20,500	Ending Inventory	1,28,000
	4,62,500		4,62,500