Question

Response Questions Part A To D Picasso's Paint Co. had an inventory balance of $3,800 on January 1. During the accounting period they made purchases of $11,500. The ending inventory balance was $3,250. If Picasso's Paint Co.uses the periodic inventory system, what is the cost of inventory sold during the period? O A. $12,050 OB. $11,500 OC. $15,300 OD. $18,550 The amount of an invoice is $4,000, with terms 2/10, n/30. The amount to be paid within the discount period is: O A. $4,000. O B. $2,800 C. $3,920. OD. $3,600 B) A company has sales revenue of $139,000, cost of goods sold of $64,000, operating expenses of $30,000, and other expenses of $5,000. The company's operating income is: O A. $75,000. OB. $45,000 OC. $40,000 OD. $70,000 Cheshire Co. purchased $2,200 of merchandise on account. The terms of the purchase are 2/15, n/45, FOB shipping point with prepaid shipping costs of $50. If Cheshire pays within the discount period, what is the amount of the purchase discount? (Round the final answer to the nearest cent.) O A. $44.00 OB. $45.00 OC. $43.00 OD. No discount is allowed when shipping is prepaid. D)

Answer 1

A. Calculation of Cost of Inventory Sold: Cost of Inventory Sold = Beginning Inventory + Purchases - Ending Inventory = $3800 + $11500 - $3250 = $12,050.00 So, Option A is Correct Answer. B. Calculation of Amount to be paid within Discount Period: Invoice Amount $ 4,000.00 Less: Discount ($4000 x 2%) $ (80.00) Amount to be paid = $ 3,920.00

c. Calculation of Operating Income: Sales Revenue Less: Cost of Goods Sold Gross Profit Less: Operating Expenses Operating Income $ 139,000.00 (64,000.00) 75,000.00 (30,000.00) 45,000.00 So, Option B is Correct Answer. D. Calculation of Purchase Discount: Purchase Price $2,200.00 Shipping Cost Prepaid $50.00 Discount Rate 2% Purchase Discount = ($2200-$50) x 2% = $43.00 So, Option C is Correct Answer.