Determine the gross margin from the first sale

Assignment Help Financial Accounting

Reference no: EM133724

Question :

The subsequent facts are taken from the Able Company's records through its first year of operations. Purpose a horizontal model, and then answer the questions.

A. The company starts operations by issuing stock totaling $25,000 for cash.

B. The company borrows money at the signs and bank a Note for $20,000.

C. The company purchases on account inventory costing $15,000. The terms are: FOB destination, 2/10, n/30.

D. The shipping of this inventory costs $250.which was paid by the proper party.

E. The company takes benefit of the discount and pays the supplier in full.

F. The company buy $10,000 inventory from another supplier for cash

G. The company's first sale: it sells its first purchase of inventory for $20,000 on account.

H. The company pays operating expenses of $4,500

I. The company sells half its second purchase of inventory for $7,500 cash

J. The company collects $4,500 from its customers.

K. The company pays the interest only on its note. The interest amount is $350.

1. Determine the gross margin from the first sale?

a. 5,000

b. 4,350

c. 5,050

d. 4,750

2. The total income for the period was:

a. 3,050

b. 7,550

c. 7,500

d. 2,700

3. Evaluate the gross margin from the second sale?

a. 5,050

b. 2,500

c. 2,700

d. 2,800

4. The cash balance at the ending of the period was

a. 27,200

b. 27,450

c. 27,550

d. 27,800

5. The amount of cash flow from investing activities was

a. (20,000)

b. (19,950)

c. 57,000

d. 0

6. The balance of the note payable at the end of the period was

a. 0

b. 20,000

c. 19,650

d. 20,350

7. How much did the company owe to its suppliers at the end of the period?

a. 15,000

b. 14,650

c. 14,350

d. 0

8. The cash flow from financing activities was ______ than the cash flow from operating activities.

a. more

b. less

9. The cash flow from operating activities was

a. positive

b. negative

10. Evaluate the ending balance in retained earnings?

a. 2,700

b. 7,550

c. 3,050

d. 10,500

Reference no: EM133724

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