7. Mega Skateboard Supplier had net sales of $3.3 million, its cost of goods sold was $1.2 million, and its net income was $0.7 million. Its gross margin ratio equals:

Multiple Choice

• 21%.

• 275%.

• 64%.

• 58%.

• 36%.

9. On September 1 of the current year, Scots Company experienced a flood that destroyed the company's entire inventory. Because the company had not completed its month end reporting for August, it must estimate the amount of inventory lost using the gross profit method. At the beginning of August, the company reported beginning inventory of $215,750. Inventory purchased during August was $192,650. Sales for the month of August were $543,100. Assuming the company's typical gross profit ratio is 40%, estimate the amount of inventory destroyed in the flood.

Multiple Choice

• $81,540

• $82,540

• $191,160

• $87,540

• $134,700

10. Spencer Co. has a $320 petty cash fund. At the end of the first month the accumulated receipts represent $55 for delivery expenses, $175 for merchandise inventory, and $24 for miscellaneous expenses. The fund has a balance of $66. The journal entry to record the reimbursement of the account includes a:

Multiple Choice

• Debit to Petty Cash for $320.

• Debit to Cash Over and Short for $66.

• Credit to Cash for $254.

• Credit to Inventory for $175.

• Credit to Cash Over and Short for $66.