During the current year, Carl Equipment Stores had net sales of $400 million, a cost of goods sold of $330 million, average accounts receivable of $50 million, and average inventory of $30 million.

Assuming a 365-day year, the average number of days required for Carl Equipment to sell its inventory is: (Round your final answer to the nearest whole number.)

Multiple Choice

• 33 days.

• 28 days.

• 304 days.

• 55 days.

On Saturday, June 30, BD Pool Supplies sold merchandise to E. Luang on account. The sales price was $3,800, and the cost of goods sold was $3,000. The sales revenue was recorded immediately, but the entry recording the cost of goods sold was dated Monday, July 2. As a result, net income for June was:

Multiple Choice

• Not affected, but the net income for July is understated.

• Overstated by $3,000.

• Overstated by $800.

On April 30, Year 1, Tilton Products purchased machinery for $176,000. The useful life of this machinery is estimated at 8 years, with an $16,000 residual value. Tilton uses a calendar year-end for financial reporting.

Assume that in its financial statements, Tilton Products uses straight-line depreciation and rounds depreciation for fractional years to the nearest month. Depreciation expense recognized on this machinery in Year 1 and Year 2 will be:

Multiple Choice

• $20,000 in Year 1 and $20,000 in Year 2.

• $8,000 in Year 1 and $20,000 in Year 2.

• $10,667 in Year 1 and $20,000 in Year 2.

• $13,333 in Year 1 and $20,000 in Year 2.

• Overstated by $3,800.