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May 5	A Merchandiser (seller) sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000) to M Company (buyer) under credit terms 2/10, n/60, invoice dated May 5, and FOB shipping point. The goods cost A $15,000.
May 6	M paid $1,000 cash for shipping charges on the May 5 purchase.
May 7	M returns 125 units because they did not fit the customers needs (invoice amount: $1,750). A restores the units, which cost $1,250, to its inventory.
May 8	M discovers that 200 units are defective but are still of use and, therefore, keeps the units. A gives a price reduction (allowance) and credits M's accounts receivable for $300 to compensate for the damage.
May 15	A receives payment from M for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount.

THIS IS financial accounting

Question 1

On May 5, what is the total cost of goods sold (COGS) that A will recognize?

Question 2

What is an entry to record the shipping charges of $1,000, and what is the shipping term?

Select one

1)Debit Cash for $1,000 and Credit Merchandise Inventory for $1,000; FOB Shipping Point

2)Debit Cash for $1,000 and Credit Delivery Expense for $1,000; FOB Destination

3)Debit Merchandise Inventory for $1,000 and Credit Cash for $1,000; FOB Shipping Point

4)Debit Delivery Expense for $1,000 and Credit Cash for $1,000; FOB Destination

Question 3

What is the gross profit that A will recognize on May 5?

Question 4

What is the numerical impact on the income statement for M, after purchasing 1,500 items, returning 125 units, and keeping 200 defective units?

Question 5

For A Merchandiser, the return of the 125 items and keeping 200 defective units by M will result in what numerical impact to gross profit?

Question 6

For M Company, what is the Accounts Payables ending balance AFTER the payment of the purchase on May 15, given beginning balance of $5,000?

Question 7

After the payment by M to A on May 15, what is the NET sales amount that A would show on its income statement?

Question 8

What is the gross margin ratio for A on the date of payment by M? Note: Round your answers to 2 decimal places.

Question 9

If A had a beginning inventory balance of $17,000 PRIOR to the sale to M, what is As inventory balance AFTER the sales, sales returns and allowances, and payment by M?

Question 10

If M had a beginning inventory balance of $0 PRIOR to the purchase from A, what is Ms inventory balance AFTER the purchase, purchase returns and allowances, and payment to A?

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