Sheridan Company accepted a national credit card for a $4500 purchase. The cost of the goods sold is $2400. The credit card company charges a 3% fee. What is the impact of this transaction on net operating income? O Increase by $2037 O Increase by $4365 O Increase by $1965 O Increase by $2100

Sheridan Company accepted a national credit card for a $4500 purchase. The cost of the goods sold is $2400. The credit card company charges a 3% fee. What is the impact of this transaction on net operating income? O Increase by $2037 O Increase by $4365 O Increase by $1965 O Increase by $2100

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Description: View PoliciesCurrent Attempt in ProgressSheridan Company accepted a national credit card for a $4500 purchase. The cost of the goods sold is $2400. The credit card companycharges a 3% fee. What is the impact of this transaction on net operating inco

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter5: Sales And Receivables

Section: Chapter Questions

Problem 63E

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Percentage of Credit Sales Method Ruby Red manufactures, markets, and distributes citrus flavored soft drinks across the globe. Ruby Red hired a collection agency in 2018 to increase collection rates from customers. As a result, Ruby estimates that only 2% of its 2019 credit sales will be written off, compared to the 4% of 2018s credit sales that were estimated to be uncollectible. At December 31, 2019, Ruby Red has a $12,800 credit balance in its allowance for doubtful accounts and credit sales of $1,570,000. Required: Use the percentage of credit sales method to calculate the bad debt expense.
Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of goods sold 660.0 Gross profit 135.0 Selling expenses 73.5 EBITDA 61.5 Depreciation expenses 12.0 Earnings before interest and taxes (EBIT) 49.5 Interest expenses 4.5 Earnings before taxes (EBT) 45.0 Taxes (40%) 18.0 Net income 27.0 a. Calculate the ratios you think would be useful in this analysis. b. Construct a DuPont equation, and compare the companys ratios to the industry average ratios. c. Do the balance-sheet accounts or the income statement figures seem to be primarily responsible for the low profits? d. Which specific accounts seem to be most out of line relative to other firms in the industry? e. If the firm had a pronounced seasonal sales pattern or if it grew rapidly during the year, how might that affect the validity of your ratio analysis? How might you correct for such potential problems?
Bad Debt Expense: Percentage of Credit Sales Method The Glass House, a glass and china store, sells nearly half its merchandise on credit. During the past 4 years, the following data were developed for credit sales and losses from uncollectible accounts: Required: 1. Calculate the loss rate for each year from 2016 through 2018. ( Note: Round answers to three decimal places.) 2. Determine whether there appears to be a significant change in the loss rate over time. 3. CONCEPTUAL CONNECTION If credit sales for 2020 are $400,000, determine what loss rate you would recommend to estimate bad debts. ( Note: Round answers to three decimal places.) 4. Using the rate you recommend, record bad debt expense for 2020. 5. CONCEPTUAL CONNECTION Assume that the increase in The Glass Houses sales in 2020 was largely due to granting credit to customers who would have been denied credit in previous years. How would this change your answer to Requirement 4? Describe a legitimate business reason why The Glass House would adopt more lenient credit terms. 6. CONCEPTUAL CONNECTION Using the data from 2016 through 2019, estimate the increase in income from operations in total for those 4 years assuming (a) the average gross margin is 25% and (b) 50% of the sales would have been lost if no credit was granted.
PROBLEM: 1. Easy Motor Company makes sales on which an 8% sales tax is assessed. The following summary transactions were made during 2020: a. Cash sales of $900,000, excluding sales taxesb. Credit sales of $2,150,000, including sales taxesc. Sales taxes of $250,000 were paid to the state Required:Prepare journal entries to record the preceding transactions. (Round to the nearest whole number.)
Roton Inc. purchases merchandise on terms of 2/15, net 40, and its gross purchases (i.e., purchases before taking off the discount) are $525,000 per year. What is the maximum dollar amount of costly trade credit the firm could get, assuming it abides by the supplier's credit terms? (Assume a 365-day year.) Do not round intermediate calculations. Select one:
GB SalesRevenue 16800 Purchases 12800 Gross Profit 4000 Selling Expenses 2000 Admin Cost 7200 Operating Loss 5200 b) Calculate mark-up (in percentage to 2 decimal places) c) Calculate the margin as a % to 1 decimal place d) What is the operating profit margin percentage if the admin cost is reduced by 60%? Show this to 1 decimal place e) Define the following and provide respective examples with numeric calculations where possible: Trade discountBulk discountEarly settlement discount f) If a company has a mark-up of 37% and sales revenue of £163,970, then what is the cost of sales in whole £’s? g) If a company has a net margin of 15%, gross margin of 35% and costs of sale of £25,000, then what is the sales revenue and overhead?
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Current Ratio Data: Year 2018: 787.25% Year 2019: 951.50% Year 2020: 1105.00% Year 2021:1553.51% Year 2022:1540.03% Question: which of the following transactions and events would result in an improvement in Current Ratio in year 2020? receiving cash for unearned sales revenue a cash receipt from a customer for amounts owing on goods previously sold on credit acquiring cash proceeds from a 5-year interest-only bank loan A and B only A and C only B and C only All of the above None of the above
Question 1Aggressive Corporation approaches Matt Taylor, a loan officer for Oklahoma State Bank, seeking toincrease the company's borrowings with the bank from $100,000 to $150,000. Matt has an uneasyfeeling as he examines the loan application from Aggressive Corporation, which just completed itsfirst year of operations. The application included the following financial statements. AGGRESSIVE CORPORATIONIncome StatementFor the year ended December 31, 2018 Net sales $200,000Expenses:Cost of goods sold $110,000Operating expenses 50,000Depreciation expense 10,000Total expenses 170,000Net income $ 30,000 AGGRESSIVE CORPORATIONBalance Sheets For the year ended December 31, 2018/December 31, 2018 2018 2017 AssetsCurrent assets:Cash $ 10,000 $0Accounts receivable 60,000 0Inventory 40,000 0Long-term assets:Equipment 100,000 0Accumulated depreciation (10,000) 0Total assets $200,000 $0Liabilities and Stockholders' Equity Page 4 of 11 HI5020 Corporate Accounting Individual Assignment T2…
Assume the marketing department has presented a plan to increase advertising expenses by $340 million. It expects this plan to result in an increase in both net sales and cost of goods sold of 25%. (Hint: Increase both sales revenue and sales returns and allowances by 25%.) Redo parts (a) and (b) and discuss whether this plan has merit. (Assume a tax rate of 34%, and round all amounts to whole dollars.)Prepare a multiple-step income statement. (Round answers to 0 decimal places, e.g. 15,222.)
Show the complete solution. On August 31, 2020, JPM Co. consigned to Cute Co. ten ladies' handbags which cost JPM P200 each. JPM paid freight charges of P100 on the shipment. On September 30, 2020, Cute Co. submitted an account sales reporting that it sold for cash seven handbags for which it remitted P2,110 representing the net proceeds after deductions as follows: Commission 20% of sales price Advertising placed upon receipt of shipment P80 Total Delivery fee of units sold P501. Questions: 1. What is the gross profit of the consignor? 2. The Consignor realized a net income on the consignment amounting to? 3. The consignee sold the 7 handbags for a total of? 4. The consignee realized income from the sale of consigned handbags amounted to? 5.The inventory of unsold handbags at September 30, 2020 was valued at?