6 A companys net sales were 676600 its co income was 86733 I

6. A company\'s net sales were $676,600, its co income was $86,733. Its gross margin as a % of sales equals. of goods sold was $236,810 and its net A. 5.0%. B. 16.2%. C. 9.29%. D, 285.7%. B. 65.0%. 7. Sherwin Williams Paint Co. terms are 3/20, n/60. What does this mean? 20% cash discount if the amount is paid within 60 days, or the balance due in 20 days. B. 20% cash discount if the amount is paid within 3 days, or the balance due in 60 days. C. 33% discount if paid within 60 days. D. 3% discount if paid within 20 days. days B. 3% cash discount if the amount is paid within 20 days, or the balance is due in 60 8. When is a debit memorandum used: A. The document a buyer issues to Inform the seller of a debit made to the seller\'s account payable in the buyer\'s records. B. The source documeat for the purchase of merchandise inventory. C. Required when a purchase discount is granted D. Required whenever a journal entry is recorded. E. Not necessary in a perpetual inventory system.

Solution

Answer to Question No. 6

Option E i.e. 65.0%

Gross Margin % = Gross Margin / Sales * 100
Gross Margin = Sales – Cost of Goods Sold
Gross Margin = $676,600 - $236,810
Gross Margin = $439,790

Gross Margin % = 439,790 / 676,600 * 100
Gross Margin % = 65.0%

Answer to Question No. 7

Option D

Term of 3/20, n/60 means the normal credit period is 60 days, but a discount of 3% will be allowed if payment is made within a period of 20 days.

Answer to Question No. 8

Option A

Debit memorandum is issued by buyer to seller which informs that a debit has been made in seller’s account in the Buyer’s book of accounts. Debit Memorandum is issued to inform debit such as discount or returns.