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Fremont Inc
Fremont Inc. made a $25,000 sale on account with the following terms: 2/15, n/30. If the company uses the net method to record sales made on credit, how much should be recorded as revenue? $25,500 $24,500 $25,000 None of these are correct Question 14 3 pts River Co. has the following data related to an item of inventory: Inventory, March 1 400 units @ $2.10 Purchase, March 7 1,400 units @ $2.20 Purchase, March 16 280 units @ $2.25 Inventory, March 31 520 units The value assigned to ending inventory if River uses FIFO is $1,104 O $1,092 $1.246 O $1.158
Expert Solution
| 13) | |||||||||
| $ 24,500 | |||||||||
| Working: | |||||||||
| 2/15, n/30 means that 2% discount will be allowed if payment made within 15 days. | |||||||||
| Total time of credit is 30 days. | |||||||||
| Under net method, sales less discount is recorded as revenue. | |||||||||
| Gross Sales (1) | $25,000 | ||||||||
| Less discount (2=1*2%) | $ 500 | ||||||||
| Net Sales | $ 24,500 | ||||||||
| 14) | $1,158 | ||||||||
| Working: | |||||||||
| FIFO stands for first in first out. It means that inventory bought first is recorded as sales first. | |||||||||
| So, ending inventory of 520 units is recorded as follows: | |||||||||
| From purchase of March 7 | = | 240 | * | $ 2.20 | = | $ 528 | |||
| From purchase of March 16 | = | 280 | * | $ 2.25 | = | $ 630 | |||
| Total |
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