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1)The following information is available for the Brown Company for 2016: Gross Profit $ 30,000 Net Sales 500,000 Beginning Inventory 220,000 Ending Inventory 40,000 What was the amount of cost of goods sold? O $470,000 O $210,000 O $180,000 O $150,000 2)Davis sells Weber equipment under an arrangement whereby Davis delivers the equipment on January 1, 2021 and receives payment on June 30, 2022
1)The following information is available for the Brown Company for 2016: Gross Profit $ 30,000 Net Sales 500,000 Beginning Inventory 220,000 Ending Inventory 40,000 What was the amount of cost of goods sold? O $470,000 O $210,000 O $180,000 O $150,000
2)Davis sells Weber equipment under an arrangement whereby Davis delivers the equipment on January 1, 2021 and receives payment on June 30, 2022. When subsequent payment occurs, Davis will record a journal entry that includes: Multiple Choice Credit to discount on notes receivable. Credit to sales revenue Credit to cash. Credit to interest revenue.
Expert Solution
1)Gross profit = Sales - COGS
$30,000 = $500,000 - COGS
COGS = $500,000-$30,000
= $470,000
2)Answer d) Credit to Interest Revenue
When the company will sell initially in 2021 ,
it will pass the entry
Accounts receivable Dr.
Sales revenue Cr .
Subsequently when the payment is received Cash will be debited and Accounts receivable will be credited. Moreover
Interest revenue will also be credited. we will collect interest for one year.
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