9. When preparing the worksheet for a merchandising business using the perpetual
ID: 2568574 • Letter: 9
Question
9.
When preparing the worksheet for a merchandising business using the perpetual inventory system, which of the following statements is incorrect?
D The Merchandise Inventory account must be adjusted based on a physical count due to inventory shrinkage.
11.
Maywood Company has a current ratio of 6.00. This indicates that the company has $6 in ________.
12
What does "2/10" mean, with respect to "credit terms of 2/10, n/30"?
13.
An invoice, with payment terms of 6/10, n/30, was issued on April 28 for $230.00. If the payment was made on May 12, the amount of payment will be ________. (Round your answer to the nearest cent.)
A The merchandiser's worksheet carries the account Cost of Goods Sold.Explanation / Answer
Answer to question 1:
The reason being worksheet procedures will be one and same for all the industries. If an entity maintains inventory on perpetual basis, it has to follow the general procedures of maintaintaing the inventory and these pricedures will not vary from industry to industry. Thereofore, The worksheet procedures are similar to the worksheet procedures for a service company. Hence, the right answer option (C).
Answer to Question 2:
Current ratio is expressed as Current assests/Current liabilites. That means this explains the relationship between Current Assets and Current Liabilities. This will tell about ability of the company to meets its current obligations i.e, current liabilities from current assets. Therefore, current liabilities will be the current obligations. Therefore, the current ratio is the urrent assets for every $1 of current liabilities.
Answer to Question 3:
To ensure prompt payment from the customers, the traders will give discount for credit transactions. This discount will be commonly represented as 1/10, 2/15 etc., which means 1% or 2% discount will be allowed if you make payment in 10 or 15 days from the date of invoice. Therefore, the right answer is OPtion (a) A discount of 2 percent will be allowed if the invoice is paid within 10 days of the invoice date.
Answer to question 4:
The payment terms are 6/10 i.e, 6% discount will be given if you make a payment within 10 days from the date of invoice i.e, April 28 in our case. But payment was done after 10 days and he will not be entitled to any discount. Thereofore, total amount payable will be $ 230.00
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