1. Andi Company purchased merchandise inventory with an invoice price of $6,000 and credit terms of 1/15, n/30 (invoice dated December 1, 2020). $1,000 of the merchandise inventory was returned on December 7, 2020. What is the net cost of the goods if Andi Company pays within the discount period?

a. $4,950

b. $5,000

c. $5,880

d. $6,000

2. On August 10, Green Company purchases goods on credit from Smith Company for $10,000, terms 2/10,1/15, n/30. Green makes payment on August 24. The entry by Green on August 24 is (assume a periodic inventory system):

a. Accounts Payable.................................................................. 10,000

Cash.............................................................................. 10,000

b. Cash....................................................................................... 9,900

Purchases Discounts.................................................... 100

Accounts Payable......................................................... 10,000

c. Accounts Payable.................................................................. 10,000

Purchases Discount.................................................... 100

Cash............................................................................. 9,900

d. Accounts Payable.................................................................. 10,000

Purchases Discounts.................................................... 200

Cash.............................................................................. 9,800

3. During 2020, Gold Enterprises generated revenues of $250,000. The companys expenses were as follows: cost of goods sold of $150,000, operating expenses of $35,000, a gain on sale of equipment of $12,500, and a loss on the sale of a computer system of $10,000.

Golds gross profit is

a. $55,000.

b. $65,000.

c. $67,500.

d. $100,000.

4. Reds Market recorded the following events involving a recent purchase of merchandise:

Sold goods for $25,000, terms 2/10, n/30 (on December 1, 2020).

Received returned goods of $1,000 from customer and granted credit (on December 5).

Paid $250 freight on the shipment.

Received payment from customer within the discount period.

As a result of these events, the companys net sales

a. increased by $23,270.

b. increased by $23,520.

c. increased by $23,750.

d. increased by $24,000

5. On April 1, Brown Company sells goods on credit to Stone Company for $6,000, terms 1/10, n/30. Brown receives payment on April 27. The entry by Brown on April 27 is:

a. Cash....................................................................................... 6,000

Accounts Receivable.................................................... 6,000

b. Cash....................................................................................... 6,000

Sales Discounts............................................................ 60

Accounts Receivable.................................................... 5,940

c. Cash....................................................................................... 5,940

Sales Discounts..................................................................... 60

Accounts Receivable.................................................... 6,000

d. Cash....................................................................................... 6,060

Sales Discounts............................................................ 60

Accounts Receivable.................................................... 6,000