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• A sales invoice included the following information: merchandise price, RM12,000; transportation, RM500; terms 2/10, n/eom, FOB shipping point. Assuming that a credit for merchandise returned of RM600 is granted prior to payment, that the transportation is prepaid by the seller, and that the invoice is paid within the discount period, what is the amount of cash received by the seller?

BKAL1013 BUSINESS ACCOUNTING - Semester 152 TUTORIAL 3: Chapter 5 Last date of submission: 24 April 2016 PART (A): 1. When a corporation sells merchandise and the terms are FOB shipping point and pays the shipping costs, the seller would record the transportation costs with the following entry: A. B. C. D. 2. Multiple-step Income Statement: A. B. C. D. 3. RM11,662 RM11,672 RM12,250 RM11,172 Merchandise with an invoice price of RM7,000 is purchased with terms of 2/10, n/30, FOB shipping point. Transportation costs paid by the buyer were RM125. What is the cost of the merchandise purchased if payment is made during the discount period? A. B. C. D. 5. shows gross profit but not income from operations. shows both gross profit and income from operations. shows neither gross profit nor income from operations. shows income from operations but not gross profit. A sales invoice included the following information: merchandise price, RM12,000; transportation, RM500; terms 2/10, n/eom, FOB shipping point. Assuming that a credit for merchandise returned of RM600 is granted prior to payment, that the transportation is prepaid by the seller, and that the invoice is paid within the discount period, what is the amount of cash received by the seller? A. B. C. D. 4. debit Cash, credit Accounts Receivable. debit Accounts Receivable, credit Sales. debit Accounts Receivable, credit Cash. debit Merchandise Inventory, credit Accounts Payable. RM6,860.00 RM6,982.50 RM7,000.00 RM6,985.00 Cost of merchandise sold would be classified as a (an): A. B. C. D. asset. expense. liability. revenue. 6. The discount period for credit terms of 1/10, n/30 is: A. B. C. D. 7. Freight costs incurred by the seller are recorded in the: A. B. C. D. 8. sales account. cost of merchandise sold account. transportation in account. transportation out account. The sales discount is based on: A. B. C. D. 9. 1 day. 10 days. 20 days. 30 days. invoice price plus transportation costs. invoice price less discount. invoice price plus transportation costs less returns and allowances. invoice price less returns and allowances. In a perpetual inventory system, what accounts are credited when a customer returns merchandise to the seller? A. B. C. D. Sales Returns and Allowances and Accounts Receivable Accounts Receivable and Cost of Merchandise Sold Merchandise Inventory and Cost of Merchandise Sold Sales Returns and Allowances and Merchandise Inventory. 10. Merchandise subject terms 2/10, n/ 30, FOB destination, is sold on account to a customer for RM15,000. The purchaser returns RM2,000 of merchandise within the discount period. Assuming payment is made within the discount period, what is the amount of cash discount allowable? A. B. C. D. RM300 RM260 RM400 RM150 11. MyGoodfellas Trading has the following information: Net sales, RM1,000,000; purchases, RM700,000; Gross profit, RM400,000; Ending inventory, RM100,000; Sales return, RM10,000; Purchases returns , RM7,000. The cost of goods sold is: A. B. C. D. RM300,000 RM400,000 RM600,000 RM900,000 12. A company makes a purchase of RM15,000 of inventory, subject to credit terms of 2/10, n/30 and returns RM5,000 of inventory prior to payment. What is the amount of the payment assuming payment is made within the discount period? A. B. C. D. RM9,800 RM19,600 RM14,700 RM10,000 13. If merchandise is sold on account to a customer for RM1,000, terms FOB shipping point, 1/10, n/30, and the seller prepays RM50 in transportation costs, the amount of the discount for early payment would be: A. B. C. D. RM0 RM5.00 RM10.50 None of the above 14. Difference between net sales and the cost of goods sold is called as: A. B. C. D. Cash discount Gross profit Discount period FOB destination 15. The income statement in which the total of all expenses is deducted from the total of all revenues is termed the: A. B. C. D. Multiple-step form Double-step form Account form Single-step form 16. Which of the following is a FALSE statement about a multiple-step income statement? A. B. C. D. Operating expenses are often classified as selling and administrative expenses There may be a section for operating assets There may be a section for non-operating activities There is a section for cost of goods sold 17. Credit terms are 3/12, n/30 indicates that the buyer is: A. Allowed a 30% discount if payment is made within 12 days B. Allowed a 12% discount if payment is made within 30 days C. Allowed a 3% discount if payment is made within 12 days D. Allowed a 3% discount if payment is made within 30 days 18. Which of the following account would the seller debit when the purchaser takes advantage of credit terms within the discount period? A. B. C. D. Purchase Discount Purchase Returns and Allowances Sales Returns and Allowances Sales Discount 19. The cost of merchandise available for sale is equal to the: A. Cost of merchandise sold minus the Ending inventory B. Sales revenue minus the Cost of merchandise sold C. Cost of merchandise sold plus the Ending inventory D. Ending inventory plus the Sales revenues 20. The collection of a RM400 account within the 2 percent discount period would result in a(n) A. increase to Accounts Receivable for RM392. B. decrease to Cash for RM392. C. increase to Sales Discounts for RM8. D. decrease to Accounts Receivable for RM392. PART (B): Questions are taken from the main text book @ Rosli,M., Junaidah,H.A., Mudzamir, M. et. Al (2011). Accounting-A Malaysian Perspective 4E Edition, Cengage, Singapore. 1. EX 4-8: Page no.223. 2. PR 4-5: Page no. 227